* Dollar index falls, awaits Fed statement later in the day
* NZD surges on growth surprise, buoys other majors vs USD
* Wave of stop losses triggered in dlr/yen
By Rika Otsuka
TOKYO, Sept 23 (Reuters) - The ailing dollar fell to a
one-year low against a basket of currencies on Wednesday as
speculators dumped the low-yielding greenback ahead of a
Federal Reserve policy decision later in the day which is
expected to keep rates at record lows.
The New Zealand dollar surged to its highest in 13 months
against the U.S. currency after the economy unexpected pulled
out of recession in the second quarter, fueling expectations
the central bank might have to start raising rates sooner than
previously thought.
The kiwi <NZD=D4> smashed through all barriers to rise over
a cent to $0.7315, its highest since early August 2008, after
gross domestic product (GDP) data showed the economy
unexpectedly grew in the second quarter, ending a prolonged
recession. []
The jump in the kiwi prompted investors to shift more money
into other higher-yielding currencies such as the Australian
dollar from the U.S. dollar, and helped trigger further
speculative dollar selling against other currencies such as the
euro and the yen.
"Dollar selling quickly spread to a wide-range of
currencies as the dollar resumed its slide the previous day,"
said Tohru Sasaki, chief FX strategist for Japan at JP Morgan
Chase Bank.
"The dollar is vulnerable at the moment as it is around key
levels against many currencies, hovering in areas where lots of
loss-cut selling orders await," Sasaki said.
But activity soon slowed as Japanese financial markets were
closed for a national holiday. Tokyo markets will resume
trading on Thursday.
The dollar index <.DXY>, which measures the dollar's value
against a basket of six major currencies, slid 0.27 percent to
75.913, off an earlier low of 75.892, a level not seen last
September. Charts indicate the next support level at around
74.70.
Data in volatile early trade had shown it fell as low as
75.828 before the initial drop was recalculated.
The dollar index has shed over 2.5 percent this month as
speculators sold the dollar on rising confidence in a global
recovery and expectations that U.S. policymakers will keep
interest rates at rock-bottom levels for some time as the
economy struggles to recover.
Those expectations are likely to get a boost when the Fed
ends its two-day policy meeting later in the day. Expectations
are growing that the Fed will reiterate its intention to keep a
super-accommodative policy for an extended period.
[]
The euro <EUR=> rose past resistance around $1.4825 to a
one-year high of $1.4843 on trading platform EBS before
slipping back to $1.4816, up 0.2 percent on the day.
The dollar fell as low as 90.47 yen on EBS before crawling
back to 90.72 yen, down 0.4 percent from late U.S. trade.
Dealers said stop-losses were triggered around the 90.90 yen
level, making the drop even sharper.
"Regarding the dollar/yen, we thought stops had been
cleared out after the pair fell near 90 yen many times last
week. But moves this morning showed there were some more out
there," said a forex trader at a Japanese bank.
"Also, speculators really want to push down the greenback,
even against the (low-yielding) yen," he said.
The dollar fell to a seven-month trough of 90.12 yen last
week, nearing the psychologically important 90 yen level.
"Markets are looking very in tune indeed for further gains,
all except the U.S. dollar of course, which could be close to a
sharp fall," Clifford Bennett, chief economist at Kinetic
Securities in Sydney, said in a note.
"The G20 is the fly in the ointment. We need to clear that,
which has some risk of strong dollar rhetoric emerging. (The)
overall down-trend in the U.S. dollar is likely to persist
however."
Leaders at a Group of 20 nations summit later this week are
also expected to call for economic stimulus plans to stay in
place, a move which could give a boost to riskier assets.
[]
Some of the largest Western powers rallied support behind a
U.S. plan to build a more balanced global economy. Analysts
said the U.S. plan, which will be presented at the G-20 summit,
would be unlikely to work without further depreciation in the
dollar.
Brazil, however, called the plan "obscure" [].
The Australian dollar, considered a proxy to global growth,
jumped to a new 13-month high, tracking gains in the New
Zealand dollar and capitalising on U.S. dollar weakness. The
Aussie <AUD=D4> rose to as far as $0.8790 before trimming gains
to $0.8769, up 0.4 percent.
The New Zealand dollar stood at $0.7266, up 1.1 percent.
"It is a bit odd that the kiwi is leading the rally in the
majors, but it just tells us about the sentiment and the risk
reversal that has taken place," said Jonathan Cavenagh,
currency strategist at Westpac.
"The broad theme is U.S. dollar weakness, and we must say
it is looking ugly technically too."
(Additional reporting by Anirban Nag in Sydney)
(Editing by Kim Coghill)
