* Dlr index hits 1-year low, euro reaches 2009 peak
* NZD climbs to 1-year high vs USD, GBP rises to 1-mth high
* Stronger Chinese data helps Aussie regain
By Satomi Noguchi
TOKYO, Sept 11 (Reuters) - The dollar fell to a one-year low
against a basket of currencies on Friday after Chinese data came
in stronger than expected and added to economic recovery hopes,
prompting investors to keep shifting funds to riskier and
growth-linked currencies.
The dollar dropped to a seven-month low against the yen and
a one-year trough versus the New Zealand dollar. Broad selling of
the greenback also lifted the euro to a fresh 2009 high.
The Australian dollar erased earlier losses and gained versus
the U.S. dollar after data showed China's industrial output
expanded in August at the fastest rate in 12 months, slightly
topping forecasts and showing that it was well on the road to
recovery. []
Traders said pressure in the market to sell the U.S dollar
was already strong on improving economic data and company
earnings from the United States on Thursday, even before the
Chinese data boosted risk-seeking sentiment.
"The pressure to sell the dollar is very strong and people
are not questioning holding dollar short positions," said a
trader for a Japanese trust bank.
The dollar index, a gauge of the greenback's performance
against six other major currencies, fell as low as 76.548, its
lowest since September 2008, before trading at 76.573 <.DXY>,
down 0.2 percent on the day.
The dollar dropped as low as 91.13 yen on trading platform
EBS.
Traders said dollar buying seen as coming from options desks
looking to hedge their books which have exposure to options
triggers crowded towards 90.00 yen are slowing the dollar's fall
versus the yen.
"Financial markets overall are staying calm (about the
dollar's recent weakness) as stocks are firmer and there was
solid demand for U.S. Treasury auctions this week," said Kosuke
Hanao, head of treasury products sales at HSBC.
He said market participants will likely take the dollar's
softening in stride as long as its pace is only gradual, but that
there were concerns how far the greenback will weaken.
This week's three auctions of U.S. Treasuries, worth $70
billion, met solid demand, alleviating some fears that the
appetite for U.S. government debt may be dwindling in the face of
the massive doses of supply. []
The market showed little reaction to data showing Japan's
economy grew a revised 0.6 percent in the three months to June,
less than preliminary figures had shown but confirming that the
economy has crawled out of recession after a full year of sharp
contraction.[]
The euro rose 0.2 percent to $1.4616 <EUR=> after climbing as
high as $1.4622 on EBS, its highest since December 2008.
The Aussie rose to the day's highs after the Chinese data,
regaining 0.2 percent to $0.8652 <AUD=D4> and stood a touch
closer to a over one-year high of $0.8669 hit earlier this week.
The Australian dollar earlier fell against the dollar and the
yen as investors booked profits from this week's quick gains in
the currency and after weaker-than-expected data on employment
and retail sales this week cooled expectations for an interest
rate hike as early as next month.
But analysts said demand from Asian central banks
diversifying their reserves out of the greenback kept providing
strong support to the Aussie.
"Our trading desk has seen significant flows from central
banks buying AUD/USD over the past few days, perhaps in a sign
that central banks, particularly those based in Asia, are
diversifying their reserve base away from the U.S. dollar," said
Riki Polygenis, an economist at ANZ bank in Sydney.
The New Zealand dollar climbed to a one-year high of $0.7053
while sterling rose to a one-month high of $1.6735 <GBP=D4>,
adding to gains made on Thursday after the Bank of England left
monetary policy unchanged as expected, countering speculation of
further easing.
(Additional reporting by Anirban Nag in Sydney, Kaori Kaneko in
Tokyo; Editing by Joseph Radford)
