* Dollar index slides on speculation Fed may suggest more QE
* Aussie rallies after hawkish comments from RBA's Stevens
* Dlr/yen little changed, investors wary of intervention
(Adds comment, updates throughout; previous SYDNEY)
By Naomi Tajitsu
LONDON, Sept 20 (Reuters) - The dollar slipped broadly on
Monday on speculation the Federal Reserve may flag the need to
inject more stimulus into the struggling U.S. economy when it
announces its latest policy decision on Tuesday.
Against the yen, the U.S. currency was little changed,
trading in thin ranges due to a market holiday in Japan and as
investors were cautious of taking big yen positions following
Japan's intervention last week.
The prospect the U.S. economy may require more quantitative
easing -- often seen as currency-negative -- highlighted
differences in monetary policy outlooks among major central
banks, with the Australian dollar rallying on hawkish remarks
from the Reserve Bank of Australia. []
The Fed is widely expected to refrain from implementing new
steps to ease monetary policy on Tuesday, while renewing its
promise to keep its portfolio of assets from shrinking.
"The consensus is that the Fed won't do anything tomorrow,
but if they indicate that more QE may be on the way, it would
send a strong signal to sell the dollar during the week," said
Kasper Kirkegaard, currency strategist at Danske in Copenhagen.
By 0737 GMT, the U.S. currency had fallen 0.4 percent
against a currency basket, taking the dollar index down to
81.059 <.DXY>, near a five-week low hit last week.
The Australian dollar <AUD=D4> rose 1.1 percent to $0.9464,
boosted after RBA Governor Glenn Stevens said he was prepared to
use interest rates to help manage strong growth in the economy.
This suggested Australian rates will continue to rise, which
would boost the rate advantage held by the country's currency.
The euro <EUR=> rose 0.5 percent to $1.3117.
A 0.8 percent rise in European shares <> helped the
single currency recover from a slide late last week. It fell
after speculation Ireland may turn to the IMF for assistance.
While such speculation was blasted by the Irish government
it highlighted the fragility of some countries in the euro zone,
and analysts say such issues may come back to haunt the euro.
SEK SLIPS AFTER ELECTION
The dollar <JPY=> traded at 85.62 yen, barely moving from
late last week after Japan authorities massively sold yen for
dollars to curb yen strength, pull the U.S. currency up from a
15-year low.
Further gains were capped by its 55-day moving average,
which came in at 85.88 yen on Monday, and investors were focused
on whether the dollar would break above 86.00 yen.
In addition to the prospect of more yen intervention, recent
strength in the currency may subside as speculators cut long yen
positions, or bets the currency will appreciate.
The latest CFTC data shows net long yen positions fell to
47,642 as of last Tuesday, the day before Japan entered the
market, from 52.183 the previous week. Still, speculators
continue to increase bets on more dollar weakness. []
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Graphic on positioning data http://r.reuters.com/kus26k
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
The Swedish crown slipped against the euro <EURSEK=D4> in
the aftermath of a Swedish election on Sunday which resulted in
a hung parliament after the centre-right government won a second
term but was deprived of an outright majority. []
Analysts said the political uncertainty was unlikely to have
a big impact on demand for the crown.
The crown has been the darling of the currency market due to
Sweden's strong economic fundamentals and fiscal position, and on
the view that Swedish interest rates will continue to rise.
"SEK has weakened modestly and may continue to do so on
further unwinding of the primarily long speculative position,"
SEB said in a note.
"The long-term appreciation trend is however intact as the
economic policies will remain by and large unchanged."
(Graphic by Scott Barber)
