* Dollar steady vs FX basket, weighed by sterling gains
* Stg jumps on BoE mins; Kiwi up on RBNZ Bollard's comments
* Dlr up vs euro, Aussie dollar as equities drop
(Updates prices)
By Jessica Mortimer
LONDON, Oct 21 (Reuters) - Sterling was the focus in the
foreign exchanges on Wednesday, its rise to one-month highs
against the dollar and euro after Bank of England minutes
keeping the greenback steady against a basket of currencies.
The dollar gained against the euro and currencies such as
the Australian dollar, however, as lower equities and oil prices
discouraged investors from buying currencies seen as riskier.
Sterling jumped after the minutes of the BoE's latest policy
meeting dampened expectations of an extension to quantitative
easing.
The BoE minutes showed policymakers voted unanimously to
leave its quantitative easing programme -- under which the bank
buys assets to pump cash into the economy -- unchanged last
month. []
"Today is mostly about certain currencies moving on specific
stories," said Lee Hardman, currency strategist at Bank of
Tokyo-Mitsubishi UFJ.
"The Bank of England minutes shifted the balance of risks in
favour of a pause in asset purchases in November, which the
pound has reacted to," he said.
The New Zealand dollar also gained after the country's
central bank chief Alan Bollard said a strong currency was not
necessarily an obstacle to raising the cash rate.
[].
At 1150 GMT, sterling was up 1.1 percent at $1.6566
<GBP=D4>, while the euro fell more than 1.2 percent against the
pound <EURGBP=D4> to below 90 pence for the first time since
late September.
The New Zealand dollar was 0.2 percent higher at $0.7510
<NZD=D4> though off an earlier high of $0.7578.
Against a basket of currencies, the dollar <.DXY> was steady
at 75.552, though still hovering not far from a 14-month low of
75.103 hit on Tuesday. The euro <EUR=> fell 0.2 percent to
$1.4917.
Traders said the euro's steep falls against the pound were a
factor weighing on euro/dollar, while the single currency
remained anchored below the psychologically key $1.50 level
which it has so far failed to breach.
Ebbing risk appetite, with European shares down 0.9 percent
<> and oil prices falling more than 1 percent <CLc1>, also
helped the dollar against some currencies.
The higher-yielding Australian dollar fell 0.3 percent to
$0.9208 <AUD=D4>, erasing earlier gains, while the U.S. dollar
rose 0.4 percent versus the yen <JPY=> to 91.03 yen.
Investors were also concerned there may be little scope for
further falls in the dollar after its recent drop to more than
one-year lows against a range of currencies.
"The broader environment is still one that favours dollar
weakness, but selling the dollar is becoming a trade of
diminishing returns," BTMU's Hardman said.
DOLLAR SENTIMENT STILL NEGATIVE
Many analysts were unconvinced the dollar would sustain any
recovery, with sentiment towards it still downbeat on the
prospect of U.S. interest rates staying at exceptionally low
levels for longer than those of most other major countries.
San Francisco Federal Reserve President Janet Yellen added
weight to this view, saying on Tuesday the time for monetary
tightening in the United States was still several months away
[]
"The dollar's carry disadvantage is working to prevent any
significant dollar recovery," said Ulrich Leuchtmann, head of
foreign exchange research at Commerzbank in Frankfurt.
"Euro/dollar failed to break through $1.50 yesterday, but
the downside in the pair is limited and we cannot rule out
another attempt at that level".
Jitters remained, however, that policymakers outside the
United States may increasingly express disquiet about the
strength of their currencies against the sliding U.S. dollar.
On Tuesday, the Bank of Canada killed talk of an early rate
hike, warning that favourable economic developments were being
undermined by the Canadian dollar's strength and sending the
currency down sharply. []
(Reporting by Jessica Mortimer, editing by Nigel Stephenson)
