* Euro breaks above $1.50 for first time in 14 months
* Sterling jumps on BoE minutes; Kiwi up on RBNZ comments
* Markets see Fed lagging other banks in tightening policy
(Updates prices, adds comment, changes byline)
By Nick Olivari
NEW YORK, Oct 21 (Reuters) - The dollar touched a one-month
low against sterling on Wednesday and the euro broke above the
$1.50 level for the first time in 14 months as expectations for
low U.S. interest rates weighed on the greenback.
Sterling rose after minutes from a Bank of England meeting
suggested officials are not ready to expand an emergency asset
buying program and had "differences of view" on inflation.
Analysts said that suggests central banks outside the
United States are considering winding down programs that have
flooded their economies with money. If the U.S. Federal Reserve
doesn't follow suit and holds interest rates at record lows,
that would diminish investor desire to hold dollars.
Sterling was last up 1.4 percent to $1.6608 <GBP=>, after
going as high as $1.6635, and heavy dollar selling coupled with
a rally on Wall Street helped push the euro as high as $1.5041
<EUR=>. It was last up 0.6 percent at $1.5032.
"Not everyone is serious about raising rates yet, but the
fact that the BoE may not add any more money to the system has
the market looking for the same type of rhetoric from the Fed,"
said Boris Schlossberg, head of FX research at GFT Forex in New
York.
"Part of the reason the dollar is hobbling along, trying to
keep its footing, is that people think the Fed is handcuffed
until the labor market stops contracting," he said.
Late Tuesday, San Francisco Federal Reserve President Janet
Yellen said the time for monetary policy tightening in the U.S.
was still some way off. For details see [].
The Fed has extended more than $2 trillion of credit to the
financial system, and Chairman Ben Bernanke has said interest
rates should remain low for some time. That makes the dollar
less attractive to investors than higher-yielding currencies
and assets more closely correlated with economic recovery.
Against a basket of currencies, the dollar <.DXY> hit a
fresh 14-month low of 74.94. Whether the euro, the biggest
component of the basket, pushes higher depends to some extent
on U.S. stocks and crude oil futures, which broke above $81 a
barrel on Wednesday.
The dollar and commodities are often inversely correlated,
with gold and oil priced in dollars and seen as an alternative
currency and hard asset themselves.
"Before we say the floodgates have opened, we have to see
whether gains in the S&P 500 and oil are going to accelerate as
quickly," said Andrew Chaveriat, technical analyst at BNP
Paribas in New York. A euro move to around $1.5070 could spark
profit-taking and a temporary retreat, he added.
The dollar, however, was up 0.3 percent against the yen to
90.97 yen <JPY=>.
BOE TAKES FOOT OFF THE GAS
BoE officials voted unanimously to continue a 175 billion
pound quantitative easing program, minutes showed, surprising
those who feared the bank might expand its size and scope.
Policymakers differed on the inflation outlook, however,
suggesting some were wary of adding more money to the system.
[]
"The minutes shifted the balance of risks in favor of a
pause in asset purchases in November, which the pound has
reacted to," said Lee Hardman, strategist at Bank of
Tokyo-Mitsubishi UFJ in London.
The New Zealand dollar rose 1.7 percent to $0.7620 <NZD=>,
near a 15-month high, after central bank chief Alan Bollard
said currency strength was not necessarily an obstacle to
higher interest rates. []
This month, Australia became the first developed country to
raise rates since the global crisis began, pushing the
Australian dollar <AUD=> to a 14-month high this week.
In China, the State Council said economic recovery had been
"consolidated," a shift in rhetoric some analysts say may be
the first hint officials are at least thinking about how to
normalize loose monetary and fiscal polices. []
(Additional reporting by Jessica Mortimer in London and
Steven C. Johnson in New York; Editing by James Dalgleish)
