* Dollar back under broad-based pressure, hits 14-month lows
* Yen gains as Japan official says shouldn't intervene
* Rise in gold, commodities, stocks feeds pro-growth trades
By Charlotte Cooper
TOKYO, Oct 14 (Reuters) - The dollar tumbled to 14-month lows
on Wednesday, hurt by persistent expectations for low U.S.
interest rates, investor appetite for commodity currencies and
expectations that Japan at least was not ready to break its fall.
It skidded to its lowest levels since August last year
against the euro, the Australian dollar and a basket of six major
currencies, but its steepest fall on the day came against the yen
after a senior Japanese official signalled intervention was
undesirable.
Naoki Minezaki, one of Finance Minister Hirohisa Fujii's
deputies, told Reuters that Japan should not step into the
foreign exchange market just because the yen rises, fuelling
market suspicions that Tokyo is not close to intervening to stem
yen gains. []
Already under pressure, the dollar fell below 89.00 yen
towards a recent eight-month low at 88.01 yen, shedding 0.9
percent on the day and helping the yen rise across the board.
"In the beginning it was a general sell-off of the dollar.
But in addition to that there were comments from a Ministry of
Finance official which reiterated the recent stance to accept the
strength of the yen," said Masafumi Yamamoto, chief FX strategist
Japan at Barclays in Tokyo.
Buoyant commodity prices, with gold rising to its latest
record, and a rise in S&P futures <SPc1> added to investor
appetite for pro-growth trades, with the Australian dollar
gaining and the Canadian dollar nearing a 14-month high.
Dollar selling has rotated against European and Asian
currencies in the past few weeks, with talk among traders that
it, along with sterling, is being used to fund investment in
currencies with prospects of higher interest rates and growth.
The dollar index <.DXY>, a measure of the greenback's
performance against six major currencies, fell to 75.551, its
lowest point since August 2008.
"The dollar should weaken and 75 on the index is a very
important level," said Robert Rennie, chief currency strategist
at Westpac.
"For the index to be there, the euro should test $1.50 and I
guess the momentum is very much there for that to happen."
The euro gained 0.2 percent to $1.4891 <EUR=>, its highest
since August last year. The Australian dollar rose 0.5 percent to
$0.9145 <AUD=D4>, its latest 14-month peak.
Federal Reserve Vice Chairman Donald Kohn said on Tuesday
the U.S. economy would not snap back quickly from its deep
recession, fuelling market expectations for continued low U.S.
rates which have kept pressure on the dollar. [].
Analysts said the next focus was economic data such as U.S.
retail sales for September due at 1230 GMT as well as quarterly
results from U.S. banks.
"People are interested in the strength of U.S. consumption.
Consumption remains the source of problems for a U.S. recovery,
and that would affect Fed exit policies," said Tomoko Fujii, a
currency strategist at Banc of America Securities-Merrill Lynch.
STAND-BACK STANCE
The dollar was down 0.8 percent on the day at 88.99 yen
<JPY=>, heading back towards last week's eight-month low of 88.01
yen and towards January's 13-year low at 87.10 yen. It has shed
about 9 percent against the yen since early August.
Minezaki said the yen's rise was due to dollar weakness and
that weakness was likely to persist. Finance Minister Fujii has
also indicated recently that the new government elected in August
is likely to tolerate greater strength in the yen, although he
and Minezaki have said rapid swings in FX rates are undesirable.
Other Asian authorities are said to have bought dollars last
week but Japan has not intervened since 2004, and analysts are
sceptical it would do so unilaterally unless the dollar's fall
really accelerated and it neared a record low close to 80 yen.
[]
Traders said institutional investors such as life insurers
had been selling dollar/yen and yen crosses, while hedge funds
sold the dollar after it failed to hold above 90.00 yen.
The yen has not been as strong against the likes of the euro
or the Australian dollar this year, although the euro fell 0.6
percent on Wednesday to 132.50 yen <EURJPY=R>.
The Australian dollar <AUDJPY=R>, which has been a favoured
buy against the low yielding Japanese currency, shed 0.2 percent
to 81.32 yen, although it was still holding close to its high for
the year at 82.00 yen.
(Additional reporting by Anirban Nag in Sydney and Kaori Kaneko
and Satomi Noguchi in Tokyo; Editing by Chris Gallagher)
