* Dollar down on speculation Fed may suggest more QE
* Aussie rallies after hawkish comments from RBA's Stevens
* Yen up but investors wary of further BOJ intervention
(Updates prices)
NEW YORK, Sept 20 (Reuters) - The dollar slipped broadly on
Monday with investors positioning for the possibility the U.S.
Federal Reserve may suggest the need to inject more stimulus
into the economy.
The U.S. central bank meets on Tuesday and the chance of
more Fed quantitative easing -- which may push benchmark yields
lower, hurting the return of U.S. dollar-assets -- highlighted
differences in policy among major central banks, as the
Australian dollar hit a two-year high on hawkish Reserve Bank
of Australia comments.
"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.
While the Fed is generally expected to refrain from
implementing new steps to ease monetary policy, while renewing
its promise to keep its portfolio of assets from shrinking,
some investors were not taking chances. For a Fed preview, see
[]
In late afternoon New York trade, the U.S. currency was 0.1
percent lower against a currency basket at 81.314, after
falling earlier to 81.046 <.DXY>, near a five-week low of
80.865 hit last week.
The Australian dollar <AUD=> rose more than 1 percent and
touched as high as $0.9494, its strongest since mid-2008, after
Reserve Bank of Australia Governor Glenn Stevens suggested
Australian interest rates would rise further.
Gains were capped, however, with traders citing talk of a
large option being defended just below $0.9500 with expiry at
the end of the month. If the barrier is broken, traders are
likely to quickly target the psychological $0.9500 level
itself.
Data showing a U.S. home-builder index unexpectedly held
steady in September had a limited impact on the dollar though
analysts said it could add to the Fed's consideration of
further stimulus through quantitative easing. []
FED AHEAD
A sluggish U.S. recovery has stung the dollar in recent
months as it has raised the possibility of more quantitative
easing, although recent U.S. data -- while still weak -- has
shown a slight improvement.
The National Bureau of Economic Research said on Monday,
the U.S. recession ended in June 2009 after beginning in
December 2007, making it the longest downturn since the Great
Depression of the 1930s. [].
The euro rose 0.1 percent to $1.3061 after climbing as high
as $1.3120, helped by a rise in European shares, though
sentiment toward the single currency was still dented by
concerns about Ireland's finances.
Ireland's central bank said the country would need to
rethink plans to cut a bloated budget deficit. []
The greenback traded in a tight range against the yen
because of a market holiday in Japan and as investors were
cautious of taking big yen positions after Japan's intervention
last week to curb the strength of its currency.
The dollar was 0.1 percent lower at 85.75 yen <JPY=>,
keeping in the tight range since intervention pulled the U.S.
currency up from a 15-year low.
Investors were focused on whether the dollar would break
above 86.00 yen.
However, strength in the Japanese currency may subside as
speculators have cut bets that it will appreciate.
The latest Commodity Futures Trading Commission 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. The cut was almost all in long positions which slipped to
61,215 from 65,440. Short positions rose to 13,573 from 13,257.
(Reporting by Nick Olivari and Vivianne Rodrigues; Editing by
Andrew Hay)
