FOREX-Greece debt worries hurt euro, dollar rebounds

* Encouraging data mitigate worries about Greece debt talks

* Euro sets for biggest quarterly loss vs dollar since 1992

* Dollar index rebounds after two weeks of losses

* Yellen’s message supports view of U.S. gradual tightening (Updates late market action)

By Richard Leong

NEW YORK, March 30 (Reuters) – The euro slumped against the dollar on Monday on worries over whether Greece would secure aid before it runs out of cash in three weeks, while the greenback gained versus other currencies on the view the Federal Reserve will raise U.S. interest rates this year.

Athens sounded upbeat about talks with its creditors to release funds from its 240-billion-euro aid package while Germany called for a more detailed list of reforms.

Concerns about the negotiations were mitigated by encouraging European data. A report showed confidence in the euro zone economy rose to its highest since July 2011 and a positive reading on German inflation raised hopes the region would avert deflation.

The euro remains under pressure from the diverging policy paths of the Fed and the European Central Bank, supporting the notion it would fall to parity with the dollar this year, analysts said.

“That’s a pretty strong headwind for the euro,” said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.

The euro zone single currency was down 0.7 percent against the dollar at $ 1.0813. This brings its quarterly decline to 10.6 percent, which would be its largest since the fourth quarter of 1992.

The euro fared better versus the yen, up 0.2 percent at 129.94 yen.

The dollar rebounded following comments late Friday from Fed Chair Janet Yellen which underscored the view that the U.S. central bank is likely to start raising rates gradually later this year.

The dollar index, a gauge of the greenback’s value against a basket of currencies, climbed 0.8 percent at 98.054 after back-to-back weeks of losses.

The greenback was up 0.9 percent against the yen at 120.18 yen, while the sterling was down 0.6 percent against the dollar at $ 1.4796.

Domestic data on personal spending and pending home sales reinforced the view the U.S. economy would grow enough for the Fed to end its near-zero rate policy.

U.S. jobs data on Friday will be the key event this week. A robust report could see investors position for tighter monetary policy sooner rather than later.

Economists polled by Reuters forecast U.S. employers likely added 245,000 workers in March with the jobless rate holding at 5.5 percent..

(Additional reporting by Ahmed Aboulenein and Anirban Nag in London; Editing by Larry King, James Dalgleish and Christian Plumb)

FOREX-Euro falls on Greece debt worries, dollar rebounds

* Encouraging data mitigate worries about Greece debt talks

* Euro sets for biggest quarterly loss vs dollar since 2008

* Dollar index rebounds after two weeks of losses

* Yellen’s message supports view of U.S. gradual tightening (Updates to U.S. trading, change byline, dateline, previous LONDON)

By Richard Leong

NEW YORK, March 30 (Reuters) – The euro slumped against the dollar on Monday on worries over whether Greece would secure aid before it runs out of cash in three weeks, while the greenback gained versus other currencies on the view the Federal Reserve will raise U.S. interest rates this year.

Athens sounded upbeat about talks with its creditors to release funds from its 240-billion-euro aid package while Germany called for a more detailed list of reforms.

Concerns about the negotiations were mitigated by encouraging European data. A report showed confidence in the euro zone economy rose to its highest since July 2011 and a positive reading on German inflation raised hopes the region would avert deflation.

The euro remains under pressure from the diverging policy paths of the Fed and the European Central Bank, supporting the notion it would fall to parity with the dollar this year, analysts said.

“That’s a pretty strong headwind for the euro,” said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.

The euro zone single currency was down 0.45 percent against the dollar at $ 1.0839. This brings its quarterly decline to 10.4 percent, which would be its largest since the third quarter of 2008.

The euro fared better versus the yen, up 0.2 percent at 129.88 yen.

The dollar rebounded following comments late Friday from Fed Chair Janet Yellen which underscored the view that the U.S. central bank is likely to start raising rates gradually later this year.

The dollar index, a gauge of the greenback’s value against a basket of currencies, climbed 0.7 percent after back-to-back weeks of losses.

The greenback was up 0.8 percent against the yen at 119.98 yen, while the sterling was down 0.6 percent against the dollar at $ 1.4793.

Domestic data on personal spending and pending home sales reinforced the view the U.S. economy would grow enough for the Fed to end its near-zero rate policy.

U.S. jobs data on Friday will be the key event this week. A robust report could see investors position for tighter monetary policy sooner rather than later.

Economists polled by Reuters forecast U.S. employers likely added 245,000 workers in March with the jobless rate holding at 5.5 percent..

(Additional reporting by Ahmed Aboulenein and Anirban Nag in London; Editing by Larry King and James Dalgleish)

Euro Falls as Goldman Sachs Bear Call Underscores Record Shorts

(Bloomberg) — The euro fell, halting a two-week rally against the dollar, as Greece’s funding concerns and the European Central Bank’s aggressive monetary easing contrasted with the Federal Reserve’s path toward higher interest rates.

The shared currency has slid against 14 of its 16 major peers this year as the ECB carries out an unprecedented plan to buy 1.1 trillion euros ($ 1.2 trillion) of bonds to support the economy and stave off deflation. Speculators placed record bets on declines in the euro with the currency dropping for a record ninth month as Greece strives to persuade creditors to accept proposed reforms and release further aid.

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“The euro’s rebound is nothing more than adjustments as it remains pressured by lingering uncertainty over Greece and the ECB’s strong easing stance,” said Kengo Suzuki, chief currency strategist at Mizuho Securities Co. in Tokyo. “It is likely to drift lower toward $ 1.05.”

The euro depreciated 0.1 percent $ 1.0875 as of 7:12 a.m. in London, after completing a two-week gain on March 27 and trading below 50-, 100- and 200-day moving averages. It was little changed at 129.64 yen.

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Hedge funds and other large speculators pushed net bearish positions on the euro to a record-high in the week to March 24. They rose to 220,963 contracts, up from 193,774 in the previous period, according to data from the Washington-based Commodity Futures Trading Commission.

Greece’s Prime Minister Alexis Tsipras will update lawmakers Monday on talks held over the weekend in Brussels between Greek government officials and representatives of the country’s creditors to secure more funds from the euro area and stave off fiscal collapse.

More from Bloomberg.com: Wages Will Dominate Big Week for U.S. Data

Diverging Policies

“We continue to expect the euro to weaken vs the dollar over the coming quarters, due to both US cyclical strength and continued QE-driven portfolio rebalancing outflows from the euro area,” analysts including George Cole at Goldman Sachs Group Inc. wrote in a research note to clients on March 27. “As the Fed continues to dismantle forward guidance, the ECB has moved in the opposite direction.”

After the Fed tempered market expectations for a mid-year interest-rate increase earlier this month, sending the dollar to its biggest weekly decline since 2011, traders refocused on the direction of monetary tightening the U.S. central bank is pursuing, while other monetary authorities globally eased.

Fed Chair Janet Yellen said Friday she expects rates to rise this year. ECB President Mario Draghi said last week he’s confident Europe’s bond-buying program will hit its targets in the first month of operation.

The Bloomberg Dollar Spot Index advanced 0.2 percent to 1,193.46, pushing its climb this year to 5.5 percent. The nine months of gains would extend what is already the longest monthly streak in data going back to 2004.

‘Bull Market’

“The U.S.dollar is in a cyclical bull market,” Sam Tuck, a currency strategist at ANZ Bank New Zealand Ltd., wrote in a report to clients published Monday. “Markets have converged on June/September as the timing of the first hike and USD will continue to rally into this move.”

The Aussie fell as much as 0.4 percent to NZ$ 1.0204, the lowest since the Australian currency was allowed to float freely in December 1983, before recovering to NZ$ 1.0241. Iron ore, Australia’s biggest export, tumbled 4 percent on Friday to $ 53.14 per dry ton, the lowest level since at least 2009.

Against the greenback, the Aussie dropped 0.4 percent to 77.20 U.S. cents, heading for a five-day decline. The kiwi weakened 0.3 percent to 75.43 U.S. cents, set for a four-day loss. New Zealand’s central bank said it sold a net NZ$ 13 million ($ 9.8 million) in February and that it had a foreign-currency intervention capacity of NZ$ 9.62 billion.

Short Conviction

ABN Amro Group NV added the kiwi to its “short conviction list” of currencies against the U.S. dollar because its recent recovery is inconsistent with its key commodity export prices, the bank’s Singapore-based strategist, Roy Teo, said in a note on Monday. The kiwi is set to decline to 68 U.S. cents by year end, he wrote.

New Zealand’s dollar is about 24 percent overvalued, the most among Group of 10 currencies, according to a measure of purchasing-power parity that takes into account consumer-price gains.

Currency moves were also exacerbated before Japan’s fiscal year ends on March 31, said Yuji Saito, director of foreign exchange at Credit Agricole SA in Tokyo.

To contact the reporters on this story: Chikako Mogi in Tokyo at [email protected]; Netty Ismail in Singapore at [email protected]

To contact the editors responsible for this story: Garfield Reynolds at [email protected] Tomoko Yamazaki, Nicholas Reynolds

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Record Euro Bearish Bets Signal Two-Week Rally Vulnerable

(Bloomberg) — The euro is capped against the dollar after a two-week rally as Greece’s funding concerns and the European Central Bank’s aggressive monetary easing contrast with the Federal Reserve’s path toward higher interest rates.

The shared currency has fallen against 14 of its 16 major peers this year as the ECB carries out an unprecedented plan to buy 1.1 trillion euros ($ 1.2 trillion) of bonds to support the economy and stave off deflation. Speculators placed record bets on declines in the euro with the currency dropping for an unprecedented ninth month as Greece strives to persuade creditors to accept proposed reforms and release further aid.

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“The Greek question still has the potential to roil the EUR,” Sam Tuck, a currency strategist, wrote in an ANZ Bank New Zealand Ltd., wrote in a report to clients dated March 30. “The USD is in a cyclical bull market. Markets have converged on June/September as the timing of the first hike and USD will continue to rally into this move.”

The euro was little changed at $ 1.0883 as of 8:36 a.m. in Tokyo, after completing a two-week gain on March 27. It traded at 129.84 yen from 129.73 in New York.

Hedge funds and other large speculators pushed net bearish positions on the euro to a record-high in the week to March 24. They rose to 220,963 contracts, up from 193,774 in the previous period, according to data from the Washington-based Commodity Futures Trading Commission.

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Greece’s Prime Minister Alexis Tsipras will update lawmakers Monday on talks held over the weekend in Brussels between Greek government officials and representatives of the country’s creditors to secure more funds from the euro area and stave off fiscal collapse.

Dollar Strength

The Bloomberg Dollar Spot Index has advanced 1.6 percent in March to 1,191.55, pushing its climb this year to 5.4 percent. The nine months of gains would extend what is already the longest monthly streak in data going back to 2004.

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After the Fed tempered market expectations for a mid-year interest-rate increase earlier this month, sending the dollar to its biggest weekly decline since 2011, traders refocused on the direction of monetary tightening the U.S. central bank is pursuing, while other monetary authorities globally eased.

Fed Chair Janet Yellen said Friday she expects rates to rise this year. ECB President Mario Draghi said last week he’s confident Europe’s bond buying program will hit its targets in the first month of operation.

“The euro may find a floor around $ 1.08 and trade in a narrow range while traders watch U.S. data,” said Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., a margin-trading-services provider, wrote in a note to clients.

To contact the reporter on this story: Chikako Mogi in Tokyo at [email protected]

To contact the editors responsible for this story: Garfield Reynolds at [email protected] Naoto Hosoda

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FOREX-Dollar recovers against euro as traders still eye 2015 rate hike

* Traders buy dollar on dips on diverging monetary policy view

* Dollar recovers against euro after two sessions of losses

* Fed statement still has weakening effect on dollar (Updates to open of U.S. trading, adds comments)

By Sam Forgione

NEW YORK, March 24 (Reuters) – The U.S. dollar rebounded against the euro on Tuesday on persistent bullish sentiment toward the greenback tied to the divergence of monetary policy between the United States and Europe, but the impact of last week’s Federal Reserve statement limited its gains.

The dollar recovered against the euro after two straight sessions of losses on the view that the Fed will still hike interest rates this year, while the European Central Bank continues with its bond-buying stimulus program.

Early in Tuesday’s session, the euro rose above $ 1.10 for the first time since March 18, when the Fed released its latest policy statement.

“The hangover from the Fed meeting certainly seems to be ongoing,” said Dean Popplewell, chief currency strategist at Oanda in Toronto.

Analysts said the dollar will continue to find support as it hits key lows against other currencies.

“Obviously a cold towel has been put on the (long dollar) trade, but the trend is still there” for dollar strength, said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York.

Popplewell said the market could remain volatile as traders and the Fed eye economic data releases in the United States. The dollar sharply pared its earlier losses against the euro after data showing U.S. consumer prices rebounded in February. The dollar later retraced losses before recovering.

The Swiss franc, meanwhile, hit multi-week highs against the dollar and the euro. Popplewell said selling of the British sterling against the franc after weak British inflation data also helped the franc gain against the dollar and euro.

The dollar hit a nearly one-month low against the Swiss franc of 0.95360 franc, while the euro hit a more than six-week low against the franc of 1.0422 franc.

The euro was last down 0.17 percent against the dollar at $ 1.09260. The dollar was down 0.04 percent against the yen at 119.680 after earlier hitting a nearly one-month low against the currency of 119.220 yen.

The dollar index, which measures the greenback against a basket of six major currencies, was last up 0.10 percent at 97.136.

(Reporting by Sam Forgione; Additional reporting by Ahmed Aboulenein in London; Editing by Peter Galloway)

FOREX-Euro continues bounce; Fed eyed for interest rate clues

* Euro gains against dollar for second straight day

* Traders taking risk off table ahead of Fed policy meeting

* BOJ stands pat on policy, market reaction limited

By Ahmed Aboulenein

LONDON, March 17 (Reuters) – The euro rose for a second day against the dollar on Tuesday as investors awaited the start of a two-day U.S. Federal Reserve policy meeting that will test expectations of a mid-2015 rise in U.S. interest rates.

The single currency had come under pressure after the European Central Bank began a bond-buying programme last week that will pump more than one trillion euros of newly created money into the euro zone economy.

But the euro won some relief on Monday after weaker-than-expected U.S. manufacturing, industrial output and housing data pushed down U.S. debt yields and cooled the dollar’s advance.

The U.S. currency’s surge since early March has been driven by growing speculation that the Fed’s Open Market Committee (FOMC) will point towards a June rate rise by dropping a pledge to be “patient”.

The dollar has gained around 20 percent against a basket of major currencies over the past six months as investors bet the Fed will be the first major central bank to raise rates since the financial crisis. But some reckon the Fed cannot ignore how much that rise reduces pressure on inflation.

“Our view is that the Federal Reserve will indeed drop the word ‘patient’ from the statement but it will be very cautious nonetheless,” said Alvin Tan, currency strategist at Societe Generale in London.

“The profit-taking continues from yesterday following the poor U.S. data that we had and the market is being cautious ahead of the FOMC meeting.”

Having hit a 12-year low of $ 1.0457 at the start of the week, the euro was up a third of a percent at $ 1.0603. The dollar was around 0.1 percent lower against a basket of major currencies.

Derek Halpenny, European head of global markets research at Bank of Tokyo-Mitsubishi UFJ in London, said investors were keen to take risk off their books ahead of the Fed meeting.

“If you’ve been short euro over the past week, you’ve had a good week, and why would you bother running the risk into what is a difficult event to predict?”

The dollar was up 0.05 percent to 121.28 yen, stuck in a relatively narrow range since advancing to an eight-year high of 122.04 on March 10.

The Bank of Japan concluded its two-day policy meeting on Tuesday, at which the central bank stood pat on monetary policy and maintained its massive stimulus. Market reaction was limited because the outcome was as expected.

(Additional reporting by Jemima Kelly in London; Editing by Mark Trevelyan)

The Euro and the Risk of a Squeeze

The speed of the euro’s decline is starting to put seasoned market-watchers on edge.

Monday, the currency hit another 12-year low, an almost daily occurrence right now, with the rate touching $ 1.0457.

This is marvelous news for the funds that have bet on a slide.

But with the euro now down by almost 13% against the dollar so far this year and counting, it’s all happening very quickly. Many analysts had penciled in $ 1.05-ish for the end of this year. Now they’re scrambling for ‘more bearish than thou’ forecasts under parity.

As a general rule, major currencies just don’t move as sharply as this. Emerging-markets currencies sometimes, but not the big tectonic plates like the euro.

“We are now at one of those tricky points where on the one hand, our view has been fundamentally very euro-bearish. But on the other hand, prices have moved very far very fast, and we have already reached our trading targets,” says Jens Nordvig, head of currency strategy at Nomura.

While expectations that the currency will keep sliding in the medium term remain intact, he says, “from a trading perspective […] the risk of a significant retracement higher to 1.10-1.12 for EUR/USD is also increasing.”

The bank, which was short the euro against the dollar, is closing the trade after making a profit of 5.9% as the euro kept falling and is now using different options that allow to trade at the same time both a possible fall and a temporary bounce back in the currency.

Positioning data confirm this view is shared among investors. With the euro trading at its weakest levels in 12 years, combined bets that the euro is going to fall are now lower than the record shorts hit earlier this year, after the ECB announced its easing program, as shown the gray area in this chart.

And it’s certainly not too hard to imagine that the Fed this week disappoints those looking for a rate rise sooner rather than later. If Janet Yellen stays patient, the dollar would be very vulnerable to a tumble.

Henderson Global Investors is among the investors closing bets on the euro seeing the fall in the currency so far this year as sufficient.

The asset manager closed a euro short trade at the end of last week. “The euro has weakened a huge amount already and the move has become quite parabolic and pretty consensus,” says Kevin Adams, head of fixed income at the firm.

But weekly positioning data from the Commodity Futures Trading Commission Friday show that investors have bet a combined $ 24.2 billion on a further fall in the euro against the dollar as of March 10.

These numbers represent a little sliver of the market, but are still a decent read on speculative bets as a whole. Bets against the euro have been building since mid-2014.

At first flush, this all seems odd in the context of climbing stocks. So far this year, the Stoxx 600 European equity index is up by about 17%. The Dax 30 has become one of the world’s best performing indexes, and on Monday surged above 12000.

Some analysts explain this away with hedging. “When euro-denominated assets rise, more euro selling is required to compensate for the higher share of euro assets in the portfolio, which in turn will drive more euro weakness,” wrote analysts at Danske Bank Monday.

The obvious question is when that might snap. “We are skeptical that the euro will continue to ignore the positive development [in the eurozone economic performance] in the coming month and expect a comeback of the currency by June or July this year,” says David Kohl, currency strategist at Julius Baer.

FOREX-Euro rebounds as dollar pauses for breath

(Recasts, adds details, fresh quote)

* Euro rises 0.9 pct after hitting 12-year low vs dollar

* U.S. retail sales eyed for rate hike clues

* Kiwi up 1.4 pct after RBNZ sounds less dovish

By Jemima Kelly and Anirban Nag

LONDON, March 12 (Reuters) – The euro rose against the dollar for the first time in two weeks on Thursday, recovering from a slump to a 12-year low in Asian trading as the greenback took a pause from its broad upward surge.

However, traders said the euro’s gains would prove short-lived, with many expecting the common currency to fall to parity with the dollar in coming months for the first time since 2002. Both technical indicators and options market pricing showed more losses are in store for the beleaguered currency.

On Thursday Bank of America Merrill Lynch became the latest major bank to revise its euro forecasts downwards. It now expects dollar parity by the end of the year, having predicted $ 1.10 in its previous projections.

The European Central Bank’s launch of a 1.1 trillion euro bond-buying progamme this week has dented the euro’s appeal by driving yields of many euro zone bonds to all-time lows. A 30-year German bond now offers a yield which is below a two-year U.S. Treasury note.

In contrast, investors are betting that the U.S. Federal Reserve will raise interest rates in the coming months – a view bolstered by strong jobs data last Friday but which could lose support if U.S. retail sales numbers due at 1230 GMT come in weaker than expected.

The euro rebounded 0.9 percent to $ 1.0637, still not far from its 12-year low of $ 1.04940 hit overnight but on track for its biggest daily gain since early February.

“The market was definitely wrong-footed by the move this morning, which I suspect initially began as a profit-taking exercise for some dollar longs,” said Daragh Maher, a currency strategist at HSBC in London.

“What (it) shows is that the market had become too one-way in its mindset. This has reintroduced a bit of two-way risk, and a bit of pain, I’m sure.”

The dollar index, which measures the greenback against six major currencies, lost 0.8 percent ahead of the retail sales data to 98.979, having hit 100.06 for the first time since early 2003 overnight.

“Unless we get protests from other trading partners about a weakening euro, I think the trend will continue. There have been some noises from the U.S. but as long as the Europeans are happy with the currency weakness, the euro can go down further,” said Yujiro Goto, currency analyst at Nomura.

Meanwhile, the New Zealand dollar advanced after the Reserve Bank of New Zealand sounded less dovish than markets had positioned for and kept interest rates steady at 3.5 percent.

The kiwi was at $ 0.7401, up 1.5 percent and pulling away from a five-week trough of $ 0.7192 struck on March 11.

(Editing by Gareth Jones)

Euro Races Toward Record Quarterly Drop

(Bloomberg) — The euro is poised for its biggest quarterly decline as the European Central Bank embarks on purchases of sovereign debt this week to spur inflation.

The shared currency has weakened about 11.6 percent this year, eclipsing the 10.6 percent decline during the credit crunch in the third quarter of 2008. The euro slumped to a 12-year low Wednesday as national central banks in the euro region were said to have purchased sovereign debt for a second day on Tuesday in their quantitative-easing program. The dollar has outperformed it major peers this year as the Federal Reserve contemplates its first interest-rate increase since 2006.

“Because the euro is falling for a legitimate fundamental reason and has the full support of the European policy makers, it really is easy to envisage even further heavy falls as quantitative easing continues,” said Sean Callow, a currency strategist at Westpac Banking Corp. in Sydney. “This selloff is driven by a historically large divergence in the monetary stance of the Fed and the ECB. It’s something that won’t turn around anytime soon.”

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The euro was little changed at $ 1.0694 at 6:58 a.m. in London from Tuesday, after reaching $ 1.0666, the weakest since April 2003. The 19-nation currency earlier touched 129.23 yen, the lowest since August 2013, before rising 0.1 percent from Tuesday to 129.70 yen.

140 Yen

Japan’s currency fell 0.1 percent to 121.30 per dollar. The Bank of Japan is far from done driving down the yen if it wants to secure 2 percent inflation target next year, a survey of economists by Bloomberg News shows. The median estimate of 27 economists in the March 5-10 survey suggests that the yen needs to fall to 140 per dollar, a level last seen in 1998, to help the central bank meet its goal.

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The euro has slumped 6.8 percent against its major peers this year, the most among 10 developed-nation currencies tracked by Bloomberg Correlation-Weighted Indexes. The dollar, the best performer, has gained 6.9 percent, while the yen advanced 5.4 percent.

The ECB may see more capital leave the region than policy makers anticipated under its bond-buying program, pushing record low yields down even further, according to Deutsche Bank AG strategists George Saravelos and Robin Winkler.

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“The greater the European outflows, the more the euro can weaken and the lower global bond yields can stay,” Saravelos and Winkler wrote in their note March 9. “The large current account-surplus combined with ECB easing and negative rates has initiated a process of large-scale capital outflows.”

Record Level

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, was little changed at 1,209.46 and set for a record close.

The currencies of Australia and New Zealand extended declines for a fifth straight day after a report showed that industrial production in China, their biggest trading partner, rose less than economists had forecast.

Australia’s dollar slipped 0.2 percent to 76.13 U.S. cents, after earlier touching 75.88, the weakest level since May 2009.

Reserve Bank of Australia Assistant Governor Christopher Kent said Wednesday the nation’s currency is still “relatively high” given the economy’s state even after its recent depreciation.

“Kent described the exchange rate as high relative to the state of the economy, rather than relative to fundamentals,” Michael Turner, a debt and currency strategist at Royal Bank of Canada in Sydney, wrote in a note. “We expect this will be the new mantra.”

The kiwi dollar dropped 0.3 percent to 72.54 U.S. cents. The New Zealand Infant Formula Exporters Association said Wednesday some members have had orders reduced or halted after a threat to contaminate product was made public. Police said on Tuesday they’re investigating an anonymous threat to poison infant formula with the toxic 1080 pesticide unless the government stops using it by the end of this month.

The Reserve Bank of New Zealand will leave its overnight cash rate at 3.5 percent when it meets Thursday, according to 14 of 16 economists in Bloomberg survey, with two predicting a 25 basis-point cut.

To contact the reporter on this story: Netty Ismail in Singapore at [email protected]

To contact the editors responsible for this story: Garfield Reynolds at [email protected] Naoto Hosoda, Jonathan Annells

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Euro falls below $1.07

He cited Dallas Fed president Richard Fisher’s comments late Monday that the Fed should promptly end its easy monetary policy and press ahead with an interest rate hike, in addition to last week’s strong February U.S. jobs report.

The launch of European Central Bank quantitative easing on Monday drove European yields lower and weakened the euro.

Earlier, the dollar hit 122.040 yen, its strongest level since July 2007. The greenback also hit 0.9988 franc, its highest since the Swiss National Bank scrapped a 1.20 francs per euro cap on Jan. 15.

Read MoreThis is only the start of volatility: Experts

The dollar also hit its highest against the Mexican peso since at least 1989, at 15.6218 pesos, and its highest against the Brazilian real in nearly 11 years, at 3.1722 real earlier on Tuesday.

Renewed concerns about Greece’s finances also weighed on the euro. Euro zone ministers warned Greece on Monday that it had “no time to lose” in securing further funding.

“Greece is thoroughly unresolved,” said Richard Franulovich, a senior currency strategist at Westpac in New York.

The dollar pared gains against the euro and erased gains on the day against the yen, however, after Bloomberg reported on Twitter that White House Council of Economic Advisers Chairman Jason Furman said the surging dollar is a headwind for U.S. growth.

The euro was last down about 1.30 percent at $ 1.0699 against the greenback. The dollar also was last down 0.29 percent against the yen at 121.09 and was last up 1.25 percent against the Swiss franc at 0.9987 franc.

The dollar index was last up 1 percent percent at 98.60.

The British pound also hit a seven-year high against the euro on Tuesday after the euro zone currency breached 71 pence for the first time since 2007.