* Yen rallies, dollar index edges higher as stocks slide
* Aussie down as CPI dents view of bigger rate hike
* U.S. new home sales fall, lowers risk appetite
* Norges Bank raises interest rates to 1.5 pct
(Updates prices, adds quote)
By Gertrude Chavez-Dreyfuss
NEW YORK, Oct 28 (Reuters) - The yen and U.S. dollar gained
on Wednesday as doubts about global growth pushed stocks lower,
rekindling safe-haven demand for both currencies.
The yen and dollar were boosted as investors shunned the
Australian dollar, which fell after Australian inflation data
suggested Australia's central bank was unlikely to tighten
interest rates sharply. The yen and dollar tend to benefit when
markets shun riskier assets.
In addition, the U.S. data showing an unexpected fall in
new home sales for September added to nervousness in the market
and pushed the dollar even higher. For details, see
[].
"The (housing) number was surprisingly weak. I think that
is going to add to the trend that we've seen recently where
investors are questioning the robust pace of economic recovery
going forward," said Joe Manimbo, currency trader at Travelex
Global Business Payments in Washington.
"That has benefited the dollar and helped to revive its
safe-haven appeal."
The soft housing number followed surprisingly weak U.S.
consumer confidence figures on Tuesday and has offset a solid
U.S. durables goods report. [].
Still, RBC Capital Markets senior currency strategist
Matthew Strauss believes investors have yet to turn "full-blown
bearish" on the economy, and the current move is just a case of
profit-taking after a long and strong period of gains in risky
trades.
Analysts said the Australian consumer price inflation data
was one of the triggers working against risk sentiment. While
the inflation number was generally in line with forecasts,
analysts said it was not strong enough to justify expectations
for an aggressive interest rate increase next week.
[]
In midday trading, the Australian dollar was down 1.5
percent on the day versus the greenback at US$0.9028 <AUD=> .
Overnight interest rate swaps markets showed investors are now
looking for no more than a 25 basis point rate rise at the
Reserve Bank of Australia's meeting next week.
"For all of its stern rhetoric of late, let's not forget
that the RBA still needs reason to lift rates in this
deflationary environment even when growth appears locally
robust ," said Andrew Wilkinson, senior market analyst at
Interactive Brokers in Greenwich, Connecticut.
The New Zealand dollar <NZD=> fell in sympathy with the
the Aussie dollar, trading 1.4 percent lower at US$0.7325.
The U.S. dollar was down 0.8 percent against the yen at
91.05 yen <JPY=EBS>, retreating from a one-month high of 92.33
yen hit on EBS the previous day.
The euro <EURJPY=R> fell 0.9 percent to 134.71 yen and was
down 0.2 percent at $1.4779.
The ICE Futures dollar index was up 0.1 percent at
76.177<.DXY>.
Also on Wednesday, the Norges Bank raised interest rates to
1.5 percent, making it the first in Europe to tighten monetary
policy. The bank, however, said it sees a gradual tightening,
which slightly weighed on the Norwegian crown. See
[].
The euro was down 0.1 percent versus the Norwegian crown at
8.3885 <EURNOK=>, while the dollar was up 0.6 percent at 5.6777
<NOK=>.
(Additional reporting by Wanfeng Zhou in New York; Editing
by Kenneth Barry)
