* Euro hits 5-month low vs dollar; Commodity FX falls
* Euro/dollar breaks through key 200-day moving average
* Dollar lifted after U.S. Senate election
(Adds comment, details, updates prices)
By Naomi Tajitsu and Jessica Mortimer
LONDON, Jan 20 (Reuters) - The euro hit five-month lows
against a broadly stronger dollar on Wednesday as concern over
Greek public finances pushed the single currency decisively
below a key support level and triggered widespread selling.
The dollar hit a one-month high versus a currency basket as
investors reckoned the election in Massachusetts of a Republican
to a U.S. Senate seat might see the government rein in spending
and cut the fiscal deficit. []
Commodity-linked currencies, led by the New Zealand dollar,
fell on reports that some Chinese banks have been instructed to
curb lending -- a move that some in the market said may slow
China's economic recovery and cut its demand for commodities.
The single currency broke well below its 200-day moving
average versus the dollar around $1.4295, which had been
considered a key support level. Selling accelerated after
stop-loss orders were triggered under that level, traders said.
The last time the euro broke below that moving average was in
August 2008, when it tumbled more than 10 cents within a month.
Analysts said Tuesday's Massachusetts election may pave the
way for legislative compromises and ultimately spending cuts.
Paul Mackel, director of currency strategy at HSBC in
London, said this view contrasted with the picture in the euro
zone, where Greece's ballooning debts have raised concerns about
the fiscal health of some members of the 16-country bloc.
"Euro/dollar will stay under selling pressure at least in
the near term as the market entertains the idea that it may have
to reassess the broader tone of the U.S. fiscal situation after
the election," he said.
"If the market is considering whether the U.S. fiscal
outlook is looking better, while it's still looking ropy in the
euro zone, that's giving conviction to be short on the euro."
The euro fell as low as 86.88 pence against sterling
<EURGBP=D4>, its weakest since late August.
By 1254 GMT, the euro <EUR=> traded 1.1 percent lower at
$1.4140, having hit a low of $1.4132, a five-month low.
The euro has fallen around 1 percent against the dollar so
far this week, and some in the market said the pace of its
losses may slow in the near term.
"We could see a continued slide in the euro, but we do
acknowledge that the market is becoming overstretched," said
Carl Hammer, currency strategist at SEB in Stockholm.
Concerns about Greece's ability to deal with its budget
deficit again weighed on the euro, with the premium investors
demand to hold Greek government bonds over German bonds hitting
an 11-month high on Wednesday []
Broad dollar gains helped push its value against a currency
basket to 78.111 <.DXY>, its strongest in a month.
COMMODITY CURRENCIES
The yen also rose broadly, helped by rising risk aversion as
equities and commodities fell, with the euro hitting a one-month
low 128.53 yen <EURJPY=R>. [] []
The New Zealand dollar <NZD=D4> tumbled 2.5 percent versus
the U.S. dollar to a three-week low $0.7201 after data showing
easing inflation pressures cooled speculation the central bank
may soon raise interest rates. [] []
Weaker-than-forecast Canadian inflation data knocked the
Canadian dollar <CAD=D4> to a two-week low of C$1.0449 per U.S.
dollar while the Australian dollar <AUD=D4> fell 1.2 percent
against its U.S. counterpart and the yen <AUDJPY=R>.
Commodity-linked currencies suffered after Chinese media and
bank sources said banking authorities had instructed major banks
to curb lending for the rest of January. []
(Additional reporting by Jessica Mortimer)
