* Dollar claws up from 14-mth low vs euro, currency basket
* Aussie dips on profit-taking, China Q3 GDP as expected
By Masayuki Kitano
TOKYO, Oct 22 (Reuters) - The dollar bounced off a 14-month
low against a basket of currencies and the Australian dollar
eased on Thursday as investors locked in profits after Chinese
economic data offered no major surprise.
Although China's gross domestic product accelerated to 8.9
percent in the third quarter, the news was in line with market
expectations and gave traders a reason to take profits in
higher-yielding currencies such as the Australian dollar.
"I think there were hopes that the numbers might come in
stronger, but they turned out to be broadly in line with
expectations," said Masafumi Yamamoto, chief foreign exchange
strategist for Japan at Barclays Capital.
But the Chinese data is unlikely to change the prevailing
trend of dollar weakness and strength in growth-linked commodity
currencies, market players said.
"There haven't been any factors to alter the global recovery
scenario," said Yamamoto at Barclays Capital, adding that the
bank is forecasting the Australian dollar will rise towards
parity against the dollar.
The dollar index, which measures the dollar's value against
six major currencies, rose 0.3 percent to 75.201 <.DXY>. It hit a
14-month low of 74.940 on Wednesday.
The Australian dollar dipped 0.2 percent to $0.9253 <AUD=D4>,
pulling back from a 14-month high of $0.9330 hit on Wednesday,
while the New Zealand dollar fell 0.5 percent to $0.7536
<NZD=D4>, down from Wednesday's 15-month high of $0.7635.
China is Australia's biggest trading partner and robust
Chinese demand for its commodities has helped the country to
dodge a recession.
The euro dipped 0.1 percent to $1.5000 <EUR=>, but market
players said the euro seemed poised to gain further after its
surge to a 14-month high of $1.5047 hit on trading platform EBS
the previous day.
"It can't be helped," said Akira Hoshino, chief manager of
Bank of Tokyo-Mitsubishi UFJ's foreign exchange trading
department.
"Crude oil has risen above $80. Emerging market currencies
are strong and central banks in those countries will likely
intervene and the euro will probably be bought due to their asset
re-allocation," Hoshino said.
But whether the euro will rise to its record peak of $1.6040
hit last July is another matter, Hoshino said.
The euro's rise may stall before then, perhaps at $1.53 or
$1.55, he said, adding that the euro's strength is likely to have
a negative impact on the euro zone's economic fundamentals and
could push back the timing of exit policies from steps taken to
counter the financial crisis.
Sterling inched 0.1 percent higher to $1.6612 <GBP=D4>.
It had rallied on Wednesday after minutes of a Bank of
England meeting suggested officials were not ready to expand an
emergency asset-buying programme and had "differences of view" on
inflation. []
Analysts said that brought interest rate differentials back
into focus with investors expecting the U.S. Federal Reserve to
lag other major central banks in raising rates.
Richard Grace, chief currency strategist at Commonwealth Bank
of Australia, said the Fed's Beige book suggested price pressures
were very subdued in the United States, reinforcing the case that
rates there would remain low.
For more on the Beige Book click on [].
"U.S. yields are unattractive, and clearly deflationary
pressures are still there," Grace said. "All this means that the
U.S. dollar will continue to head lower."
The dollar managed to claw higher against the low-yielding
yen, rising 0.1 percent to 91.12 yen <JPY=>.
Events later on Thursday include U.S. first-time claims for
jobless benefits for the week ended Oct. 17, September leading
economic indicators and the August home price index from the
Federal Housing Finance Agency. <ECONUS>
(Additional reporting by Anirban Nag in Sydney and Kaori Kaneko
in Tokyo; Editing by Michael Watson)
