* Dollar index at 3-mth high; euro, stg, Swiss franc tumble
* Euro falls 2 cents vs dollar to $1.4330; Greece woes weigh
* Market players unwind dollar-short positions
* More upbeat Fed economic view helps dollar
(Updates prices)
By Jessica Mortimer
LONDON, Dec 17 (Reuters) - The dollar surged to a
three-month high against a currency basket on Thursday, buoyed
by an upbeat tone from the Federal Reserve, while the euro
tumbled on fresh concerns about Greece's waning fiscal health.
In thin pre-holiday liquidity, the euro slid to its lowest
against the dollar since early September, picking up pace after
breaking support at $1.45 and hitting stop-loss sell orders to
take it to near $1.43.
The dollar index <.DXY>, a gauge of its performance against
six major currencies, rose to 77.823, its highest since early
September. It was last up 0.9 percent on the day at 77.701.
Concerns about fiscal troubles in peripheral euro zone
countries gathered pace as Greece suffered the second downgrade
of its credit rating in a week on Wednesday.
The euro fell around two U.S. cents from late New York trade
to $1.4330, according to Reuters data. By 1222 GMT it was at
$1.4359 <EUR=>, down 1.2 percent on the day. It also fell more
than 1 percent against the yen <EURJPY=R> to 128.93 yen.
"The euro is suffering as a result of problems and debt
issues relating to periphery euro zone countries which could
pose a significant strain for the region," said Steve Barrow,
currency strategist at Standard Bank, adding it could fall to
$1.42 or $1.41 in the near term.
Greek assets took a lashing after Standard & Poor's cut
Greece's rating by one notch to BBB-plus from A-minus late in
European hours on Wednesday. []
The yield spread between 10-year Greek bonds and benchmark
euro zone bonds rose to 269 basis points, the widest since early
April, while Greek bank shares <.FTATBNK> fell nearly 4 percent.
Other currencies also fell against the dollar, with sterling
<GBP=D4> hitting a two-month low of $1.6080, and the Swiss franc
<CHF=> falling to a three-month low of 1.0507 francs per dollar.
Traders said moves were driven less by fundamentals than by
an unwinding of dollar-short positions ahead of the year-end.
The dollar briefly rose above 90 yen for the first time in
nearly two weeks <JPY=>, but gains were capped by Japanese
exporter orders near 90 yen, traders said.
DOLLAR GAINS
A statement by the Federal Reserve after it left interest
rates steady supported the dollar as it voiced growing optimism
on the U.S. economy. But it repeated it would keep interest
rates low for "an extended period" while saying it would wind
down most emergency liquidity measures in February.
"The problem for the euro is the mix of the FOMC statement
and the very strong concerns over Greece after the S&P
downgrade. All the euro crosses have suffered," said Roberto
Mialich, FX strategist at Unicredit in Milan.
The dollar has been dogged this year by the prospect of
interest rates staying close to zero, but it broke out of its
downtrend earlier this month as U.S. economic data improved.
On Wednesday, its 14-day moving average crossed up through
the 30-day moving average -- a move chartists saw as bullish.
The higher yielding Australian dollar <AUD=D4> fell as far
as $0.8872, its weakest since early October.
The dollar was unmoved by comments from Chinese central bank
deputy governor Zhu Min. MNSI quoted him as saying dollar
depreciation would continue and that it was getting harder for
foreign governments to buy Treasuries as the U.S. current
account deficit shrank. []
(Additional reporting by Tamawa Desai)
