* G20 vows to refrain from competitive devaluations
* Market awaiting further clues on possible Fed easing
* Aussie gains on takeover news, local data
By Anirban Nag
TOKYO, Oct 25 (Reuters) - The dollar dropped broadly on
Monday, hitting a 15-year low versus the yen, as a Group of 20
agreement to shun competitive currency devaluations was taken as
a green light to resume dollar selling by investors.
At the meeting in South Korea, G20 finance ministers also
struck a surprise deal to give emerging nations a bigger voice
in the International Monetary Fund, recognising the quickening
shift in economic power away from Western industrial nations.
[]
Analysts said the outcome at G20 pointed to a status quo in
currency markets, with the dollar staying under pressure due to
market expectations for the Federal Reserve to unveil a second
round of quantitative easing as early as November.
"The G-20 was seen as a hurdle by some and now that is over,
investors are back to do what they are most comfortable with --
dollar selling," said Ankita Dudani, G-10 currency strategist at
RBS.
The dollar index, which measures its value against a basket
of currencies, dropped 0.9 percent to 76.794 <.DXY> with support
seen around its 10-month low of 76.14 in the near term. Dudani
expected the dollar index to see some chopiness ahead of the Fed
meeting in early November.
The dollar fell 1 percent against the yen to 80.52 yen
<JPY=>, falling to its lowest in 15-years. Market players said
chances of Japanese yen-selling intervention would increase if
the dollar were to drop below 80.00 yen and test its record low
of 79.75 yen.
The euro climbed 0.8 percent to $1.4058 <EUR=>, having
broken resistance at $1.4051. That was a 76.4 percent
retracement of the euro's drop to $1.3697 last week from an
8-1/2 month high of $1.4161 hit earlier this month.
With resistance at $1.4051 gone, traders expect $1.4161 peak
to be reached soon. But gains above that there were likely to be
checked to the presence of some large option barriers.
One trader said real money accounts and trend-following
commodity trading advisers were seen buying the euro and the
Australian dollar, while another cited buying of the euro and
the Australian dollar by Asian accounts.
The Australian dollar surged nearly 1.3 percent to $0.9954
<AUD=D4>, getting an additional boost from news that Singapore
Exchange <SGXL.SI> will buy Australian bourse operator ASX
<ASX.AX>. []
A surprise jump in Australian producer prices, despite their
limited correlation with consumer prices, fanned speculation
that the Reserve Bank of Australia may raise rates next month.
FOCUS ON FED
That was in sharp contrast to the U.S. where the Federal
Reserve was all set to ease monetary policy further.
While U.S. Treasury Secretary Timothy Geithner reiterated
that the United States supports a strong dollar at the G20
meeting, analysts said there were few takers for that.
"By demanding "market determined exchange rates" (at the
G20) the U.S is opening the flood gates for a further dollar
depreciation due to the ultra-expansionary monetary policy in
the U.S," Commerzbank said in a note.
"We therefore expect the dollar to remain under pressure
until the next Fed meeting in early November, with retracements
being used as selling opportunities."
Analysts at Goldman Sachs said the Fed is almost certain to
announce renewed monetary easing at next week's policy meeting.
They said it may announce $500 billion in asset purchases or a
bit more over a period about six months, and the size could
eventually reach $2 trillion.
German Economy Minister Rainer Bruederle took issue on
Saturday with what he called a U.S. policy of increasing
liquidity, saying it indirectly manipulated exchange rates.
[]
Such criticism was unlikely to affect the Fed's stance on
monetary policy, however, said a trader for a Japanese trust
bank. If it did, it would be tantamount to an admission that the
Fed's monetary easing stance up to now had been aimed at
weakening the dollar, the trader said.
(Additional reporting by Masayuki Kitano and Charlotte Cooper
in Tokyo; Editing by Ruth Pitchford)
