* Dollar off deepest of week's lows but vulnerable
* Shares, commodities rally seen stretched
* BoE holds QE, rates steady; sterling jumps
* Aussie, kiwi slip on data, comments
(Adds BoE decision, updates prices)
By Tamawa Desai
LONDON, Sept 10 (Reuters) - The dollar edged up against a
basket of major currencies on Thursday, coming off its lowest in
almost a year and pausing from sharp falls earlier in the week.
Investors booked gains in the Australian and New Zealand
dollars, driving them down from this week's one-year highs while
the dollar failed to gain much traction after benchmark world
stocks hit an 11-month high in early trade.
Sterling rose after the Bank of England left monetary policy
unchanged as expected [] [],
countering speculation of further easing. The pound hit a near
three-week high at $1.6600 <GBP=D4>, while it touched the day's
high versus the euro at 87.58 pence <EURGBP=D4>.
The U.S. currency has suffered as investors bet on economic
recovery through commodity-linked and higher-yielding
currencies. But European stocks turned south after a strong
opening and many in the market feel the risk rally is starting
to look stretched, giving the dollar hope of a rebound.
"We'll still be looking for some further gains from some of
the major pro-cyclical and commodity currencies but there are
some risks now starting to develop which suggest that these
moves are likely to start running out of steam," said Ian
Stannard, senior currency strategist at BNP Paribas.
"The chances are it (the dollar) will probably start to
rebound."
Speculators and hedge funds have been seen playing a major
role in the recent dollar weakness, traders said.
Some analysts added a growing possibility the dollar would
replace the yen as a funding currency for leveraged carry
trades. But they also said extended dollar weakness would be
needed for that to materialise.
The dollar index <.DXY>, which tracks its performance
against a basket of six major currencies, was 0.1 percent up
from late U.S. trade at 77.192. The index plumbed 76.803 in
intraday trade on Wednesday, its lowest level in almost a year.
The euro <EUR=> fell 0.2 percent at $1.4520, after touching
the year's high above $1.4600 on Wednesday.
Against the yen, the dollar was up 0.1 percent at 92.15 yen
<JPY=>, after hitting a seven-month low of 91.61 yen on trading
platform EBS on Wednesday.
EVENT RISK
Market participants were watching U.S. trade data for July
at 1230 GMT, which is forecast to show a slightly wider deficit
of $27.35 billion from $27.01 billion in June. <ECON> []
The New Zealand dollar <NZD=D4> eased 0.4 percent to
$0.6940, falling from just below Wednesday's one-year high above
$0.7000 after the Reserve Bank of New Zealand (RBNZ) governor
said it was overvalued and on weaker-than-expected Australian
jobs data. []
Earlier the RBNZ left rates on hold at a record low of 2.5
percent as expected but indicated it was less inclined to cut
rates again. []
The Australian dollar fell after data showed Australia's
employment dropped by 27,100 jobs in August, more than double a
Reuters forecast of 12,500, although the jobless rate held
steady at 5.8 percent, better than the 5.9 percent forecast.
The Aussie dropped 0.8 percent to $0.8552 <AUD=D4>,
retreating from Wednesday's one-year high of $0.8669.
(Additional reporting by Emelia Sithole-Matarise; Editing by
Patrick Graham/Ruth Pitchford)
