* Dollar falls to 15-year low against the yen
* Dollar index drops to 8-1/2 month low
* Euro up but struggles as Fitch downgrades Ireland
(Recasts with additional details on technical levels and
updates prices)
NEW YORK, Oct 6 (Reuters) - The dollar tumbled to a new
15-year low against the yen and an 8-1/2 month low against a
basket of currencies on Wednesday on rising expectations the
U.S. Federal Reserve will further ease monetary policy.
The euro rose above its 200-week moving average around
$1.3921, hitting a fresh eight-month high as the U.S. dollar
extended losses.
The yen climbed to levels where the Bank of Japan last
month sought to weaken it. Investors were reluctant to push the
dollar too low against the Japanese currency over fear of a new
intervention.
Dollar losses accelerated after a report showed U.S.
private employers unexpectedly cut 39,000 jobs in September
after an upwardly revised gain of 10,000 in August.
[]. The private-sector report from ADP, a payrolls
processor, gives a glimpse of the labor market ahead of
Friday's government data on U.S. non-farm payrolls for
September.
"It all adds to the case for the Fed coming in to create
more stimulus," said Eric Viloria, currency strategist at
Forex.com in New York.
The comments of Chicago Federal Reserve Bank President
Charles Evans, quoted as saying the central bank should do much
more to spur the economy [], also kept negative
dollar sentiment firmly intact. This has intensified
speculation the Fed will resume quantitative easing, possibly
in November, by buying more bonds.
Midway through the New York session, the dollar dipped as
low as 82.75 yen <JPY=EBS> on electronic trading platform EBS
before recovering to 82.86 yen, still down 0.4 percent on the
day <JPY=>. The session peak was only 83.27 leaving the
dollar/yen trading in a tight range despite the extreme low.
Wednesday's low was below the 82.87 level where the Bank of
Japan moved to weaken the yen on September 15. The greenback
was well below the high of 83.99 yen it hit on EBS after the
Bank of Japan (BOJ) announced easing steps on Tuesday.
The dollar was down 0.5 percent against a basket of
currencies <.DXY> at 77.370, having fallen as far as 77.361.
EURO GAINS
The euro gained 0.7 percent at $1.3925 <EUR=> in a volatile
session that saw it swing between losses and an eight-month
high of $1.3930 on the EBS trading platform <EUR=EBS>.
The single currency was helped earlier by data showing a
surge in German manufacturing orders in August [],
leaving a potential for the single currency to test $1.40.
The euro pared gains after Fitch downgraded Ireland's
credit rating, renewing concerns about the fiscal health of
peripheral euro-zone countries. []
The next technical level is $1.3958 on EBS, the 50 percent
Fibonacci retracement of the move from the July 2008 peak to
the June 2010 low, according to Reuters calculations.
Goldman Sachs is now forecasting euro/dollar at 1.40, 1.50
and 1.55 on 3-, 6- and 12-month basis
The dollar also touched a 2-1/2 year low against the Swiss
franc at 0.9599 francs <CHF=> on EBS trading platform. This
brings it closer to the all-time low of 0.9572 hit on EBS,
while it is already below the all-time low recorded on Reuters
data of 0.9674.
The dollar's steady drop prompted talk of an escalating
global currency war, ahead of the IMF-G7 meetings this weekend,
with emerging countries growing increasingly edgy about the
flood of capital inflows from advanced economies.
Though he did not mention any names, U.S. Treasury
Secretary Timothy Geithner on Wednesday took a not-so-subtle
dig at China when he said that countries running big trade
surpluses need to let their currencies rise or risk triggering
a destructive round of competitive devaluations.
[].
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Currency tensions rise interactive map
http://r.reuters.com/jec96p
Reuters Insider interview with French FinMin Lagarde
http://link.reuters.com/geg27p
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
Commodity currencies rose on expectations of funds being
pumped into the market, with commodities likely beneficiaries,
The higher-yielding Australian dollar <AUD=D4> hitting its
highest in more than two years at $0.9788, leaving it on course
for a test of the 2008 high of $0.9851.
(Additional reporting by Steven C Johnson and Vivianne
Rodrigues in New York and Jessica Mortimer in London)
(Reporting by Nick Olivari; Editing by Andrew Hay)
