Currencies: Dollar extends drop vs. euro after payrolls-inspired selloff

The euro edged higher versus the dollar Monday, extending gains scored Friday after weaker-than-expected nonfarm payrolls data saw investors push back expectations for a rate hike by the Federal Reserve.

The euro EURUSD, +0.55%  traded at $ 1.0991, up from $ 1.0972 in North American trade late Friday. The U.S. currency USDJPY, -0.04%  was up versus the Japanese yen at ¥119.07 compared with ¥118.93 late Friday in New York.

The ICE dollar index DXY, -0.16% a measure of the U.S. currency against a basket of six major rivals, was up 0.1% at 96.651.

Trading activity in Asia and Europe was subdued, with many traders still away from their desks for the Easter vacation and other public holidays. The dollar found downside support against the yen to stabilize above ¥119 following Friday’s losses.

Japanese importers and institutional investors were among the investors eager to buy the greenback on dips. Market participants also noted some indirect support for the dollar against the yen via selling of the Japanese currency against the euro.

Friday’s tumble in the dollar was the biggest fall in almost two weeks following U.S. labor data for March that showed nonfarm payrolls grew by 126,000, about half the increase forecast by economists in a Wall Street Journal survey.

Read: Poor jobs report blurs economic outlook

“There is speculation that the consensus about a U.S. rate increase is now being pushed back to December from September,” a change in views that could lower the dollar in currency trade, said Mizuho Securities FX strategist Kenji Yoshii.

Disappointing March jobs report: Will the Fed move?

The March jobs picture and how it relates to the broader U.S. economy.

Even so, Yoshii said he didn’t “get the impression that the USD is falling very much.” He added that larger falls in the dollar are likely being prevented by a cycle in which a weaker dollar causes U.S. stocks to rise, suggesting greater buoyancy in risk-taking sentiment that results in selling away from the perceived safety of the yen and a stronger dollar.

Read: Don’t fight the Fed; invest with it

IG Securities market analyst Juniichi Ishikawa said in a note that the dollar could fall below ¥118 if U.S. stocks soften this week. Mr. Ishikawa said the reaction of U.S. shares to Friday’s downbeat labor data could push the dollar down against the yen later Monday if the shares fall. U.S. indicators, including today’s ISM non-manufacturing business index, and U.S. corporate earnings will also be under the spotlight this week.

“We are going to have a week of closely monitoring the after effects of the lackluster U.S. data and the impact of (U.S.) quarterly earnings,” he said.

The WSJ Dollar Index BUXX, -0.35% a measure of the dollar against a basket of major currencies, was donw 0.1% at 86.54.

FOREX-Dollar supported even as Yellen drives home message of patience

* Dollar firmer vs yen and euro

* Yellen’s message on gradual tightening provides no fresh impetus

* Commodity currencies continue to underperform (Adds comments, updates prices)

By Ian Chua and Masayuki Kitano

SYDNEY/SINGAPORE, March 30 (Reuters) – The dollar inched higher versus the yen and euro on Monday after the head of the U.S. Federal Reserve underscored the view that the Fed is likely to start raising interest rates gradually later this year.

The dollar edged up 0.1 percent to 119.24 yen. It has fallen more than 2 percent from a near eight-year peak of 122.04 set early this month.

The euro slipped 0.2 percent to $ 1.0873, having in the last two weeks pulled up from a 12-year trough of $ 1.0457.

In a highly anticipated speech on Friday, Fed Chair Janet Yellen outlined the case for a ‘gradualist approach’ to rate hikes, in comments mirroring those at the post-FOMC meeting on March 18.

She said policy tightening could “speed up, slow down, pause, or even reverse course” depending on actual and expected developments in the economy.

“Yellen went to great length to detail why rate hikes would not be rushed and ultimately may not reach levels previously considered to be ‘normal’,” said Ray Attrill, global co-head of FX strategy at National Australia Bank.

“Our take is that while rates may rise sooner and faster than current market pricing, they are more likely to undershoot than overshoot the Fed’s latest median ‘dot point’ trajectory.”

The diverging interest rate pathways between the Fed and most of the developed world meant that the dollar should in general stay supported.

“Our view of the U.S. dollar remains broadly positive and we have always viewed that the correction of the past two weeks in the U.S. dollar is temporary,” said Heng Koon How, senior FX strategist for private banking and wealth management at Credit Suisse in Singapore.

“We expect the Fed to start hiking rates possibly by the September FOMC and the process will likely be gradual,” he said, adding that the dollar would probably stay strong heading into the start of the Fed’s policy tightening cycle.

A key event for the dollar this week is U.S. jobs data on Friday.

Commodity currencies edged lower, partly unsettled by further falls in oil and iron ore prices last Friday, when oil prices slid 5 percent. On Monday, benchmark Brent crude oil futures slipped 0.5 percent to $ 56.13 a barrel.

The Aussie eased 0.3 percent to $ 0.7729, continuing to retreat from a two-month peak of $ 0.7939 set a week ago. It was nearing a six-year trough of $ 0.7561 plumbed early this month.

(Editing by Eric Walsh & Kim Coghill)

Euro Rises As German Private Sector Activity Hits 8-Month High

The euro strengthened against most major currencies in the early European session on Tuesday, after data showed that Germany’s private sector expanded at the strongest pace in eight months in March.

Data from Markit Economics showed that Germany’s composite Purchasing Managers’ Index rose to 55.3 from 53.8 in February. The growth has stretched to 23 months and the latest rate of expansion was the most marked since July last year.

The PMI for the service sector rose more-than-expected to a six-month high of 55.3 in March from 54.7 in February. The expected score was 55.

The manufacturing PMI came in at 52.4 versus 51.1 in February. The score was above the expected level of 51.5.

The currency showed little reaction to the Eurozone PMI data, that came after German PMI data.

Data from Markit Economics also showed that Eurozone private sector grew at the fastest pace in almost four years in March. The flash composite PMI rose more-than-expected to 54.1 in March from 53.3 in February. The index rose for the fourth consecutive month to reach the highest since May 2011. The reading stayed above the forecast of 53.6.

At 53.3, the average PMI reading for the first quarter was the highest since the second quarter of last year.

The services PMI came in at 54.3 in March, a 46-month high. Economists had forecast the index to rise to 53.9 from 53.7 in February.

Investors are also waiting for progress in Greece’s debt negotiations as Greek Prime Minister Alexis Tsipras meets leaders of Germany’s opposition Left and Green parties later today.

German chancellor Angela Merkel, who held face to face talks with Tsipras for the first time on Monday, said that Greece’s reform proposals would be evaluated by the finance ministers of the euro zone, rather than by Berlin alone.

In the early European session today, the euro rose to more than a 4-week high of 0.7351 against the pound, from an early low of 0.7302. If the euro extends its uptrend, it is likely to find resistance around the 0.76 area.

Against the U.S. and the Canadian dollars, the euro advanced to 6-day highs of 1.0999 and 1.3738 from early lows of 1.0903 and 1.3668, respectively. The euro is likely to find resistance around 1.15 against the greenback and 1.40 against the loonie.

Moving away from early lows of 130.48 against the yen and 1.4246 against the NZ dollar, the euro rose to a 6-day high of 131.40 and a 4-day high of 1.4353, respectively. The euro may test resistance near 136.02 against the yen and 1.49 against the kiwi.

The euro edged up to 1.3952 against the Australian dollar, from an early low of 1.3859. On the upside, 1.42 is seen as the next resistance level for the euro.

Looking ahead, U.S. CPI and new home sales for February, house price index for January and Markit’s manufacturing PMI for March are due in the New York session.

At 5:05 am ET, European Central Bank Vice President Vitor Constancio takes part in a panel discussion titled “The Future of International Monetary Policy and its Impact on Global Economic Recovery” at the International Financial Services Forum, in London. Subsequently, U.S. Federal Reserve Bank of St. Louis President James Bullard is also expected to participate in this panel discussion after an hour.

by RTT Staff Writer

For comments and feedback: [email protected]

Business News

Asian markets mostly welcome Fed's cautious rate talk

Most Asian equity markets rallied Thursday after comments by the US Federal Reserve cooled expectations of an early rate hike, while the euro and yen retreated against the dollar after racking up big gains in New York.

While the US central bank opened the door for a rise after six years of zero percent rates, it lowered its forecasts for economic growth and inflation and stressed it would remain cautious before making any move.

News that the Fed is in no hurry to depart from the loose monetary policy that has supported shares sent Wall Street surging, providing a strong platform for Asian indexes.

At the close of trade Sydney was 1.86 percent higher, adding 108.5 points to 5,950.8 while Seoul ended up 0.47 percent, or 9.44 points, at 2,037.89.

Hong Kong rallied 1.45 percent, or 348.81 points, to 24,468.89.

However, Tokyo sank 0.35 percent, or 67.92 points, to close at 19,476.56 as exporters were hurt by the strengthening yen. Shanghai retreated 0.31 percent in late trade after rising almost nine percent in a six-session winning streak.

After a two-day policy meeting, the Fed issued a statement that removed a pledge to remain “patient” on raising interest rates, signalling a possible mid-year rate increase.

But bank chair Janet Yellen stressed growth prospects were more muted than three months ago, despite strong increases in jobs creation. She noted consumer spending has slipped, inflation has declined, wages are flat, and the stronger dollar has hurt US exports.

The policy committee lowered its rate outlook to 0.5-0.75 percent for the end of this year, from 1.0 percent previously, while also reducing its 2016 forecast to 1.75-2.5 percent from 2.5 percent.

“Just because we removed the word patient from the statement doesn’t mean we’re going to be impatient,” Yellen told reporters.

– Dollar fights back –

The news sent the dollar tumbling and provided much-needed relief for the euro, which has been hammered by the European Central Bank’s new stimulus programme.

However, on Thursday the greenback began to recover, buying 120.65 yen against 120.09 yen in New York, although it is still well down from the 121.35 yen level in Tokyo earlier Wednesday.

The euro changed hands at $ 1.0685 against $ 1.0871, but is well up from the $ 1.059 earlier Wednesday.

At one point in New York the dollar had tumbled to 119.57 yen and the euro was at $ 1.101.

“It’s difficult to see rate hikes in June, and I expect the timing to keep being pushed back,” Mitsushige Akino, an executive officer at Ichiyoshi Asset Management Co. in Tokyo, told Bloomberg News.

“Looking at the US’s inflation rates, and the fact that wages haven’t risen despite the good headline jobs numbers, the US is not in a state to hurry into rate hikes.”

Also in New York, the Dow climbed 1.27 percent, the S&P 500 jumped 1.21 percent and the Nasdaq advanced 0.92 percent.

Oil prices were lower in Asian trade after jumping in New York in reaction to the Fed news. US benchmark West Texas Intermediate for April delivery shed $ 1.46 to $ 43.20 while Brent crude for May fell 74 cents to $ 55.17.

On Wednesday WTI gained $ 1.20 in US trade and Brent climbed $ 2.40.

Gold fetched $ 1,164.38 against $ 1,153.82 late Wednesday.

In other markets:

— Mumbai fell 0.53 percent, or 152.45 points, to end at 28,469.67.

Axis Bank fell 2.50 percent to 564.10 rupees, while Gas Authority of India Limited rose 2.19 percent to 390.05 rupees.

— Singapore rose 0.73 percent, or 24.41 points, to 3,386.16.

Oversea-Chinese Banking Corporation gained 1.27 percent to Sg$ 10.36 while oil rig maker Keppel Corp rose 0.81 percent to Sg$ 8.69.

— Bangkok was flat, edging up 0.04 percent, or 0.63 points, to 1,532.13.

Kasikorn Bank rose 1.77 percent to 230.00 baht, while Siam City Cement fell 1.00 percent to 396.00 baht.

— Kuala Lumpur’s main index closed 0.64 percent, or 11.56 points higher, at 1,809.13.

Public Bank added 0.76 percent to 18.64 ringgit, Sime Darby rose 0.22 percent to 9.30, while Tenaga Nasional lost 0.55 percent to 14.58 ringgit.

— Jakarta ended up 0.75 percent, or 40.70 points, at 5,453.85.

Auto giant Astra International rose 0.94 percent to 8,050 rupiah, while Matahari Putra Prima, which runs a variety of shops, lost 3.75 percent to close at 4,230 rupiah.

— Taipei added 0.86 percent, or 83.30 points, to 9,736.73.

Smartphone maker HTC climbed 1.07 percent to Tw$ 141.5 while Taiwan Semiconductor Manufacturing Co. was 0.33 percent higher at Tw$ 154.0.

— Wellington rose 0.22 percent, or 12.74 points, to 5,859.40.

Air New Zealand was up 0.71 percent at NZ$ 2.82 and Chorus lifted 1.56 percent to NZ$ 2.93.

— Manila closed 0.75 percent higher, adding 57.97 points to 7,814.55.

Philippine Long Distance Telephone rose 2.22 percent to 2,850.00 pesos and Ayala Land gained 1.47 percent to 37.95 pesos, while Alliance Global Group advanced 2.06 percent to 27.20 pesos.

FOREX-Dovish Fed hands euro best weekly gains in 18 months

* Market consensus has all but ruled out June hike to U.S. rates

* Euro on track for best weekly performance since Sept 2013

* BNP Paribas revises down euro/dollar forecasts

By Jemima Kelly

LONDON, March 20 (Reuters) – The euro inched up against the dollar on Friday and was on track for its best weekly performance in 18 months, boosted by a sell-off in the greenback after the U.S. Federal sounded a cautious tone on interest rates.

The greenback plunged across the board on Wednesday after the Fed downgraded its economic growth and inflation projections, signalling it is in no rush to push borrowing costs to more normal levels and pouring cold water on investor expectations of a June rate hike.

Having dived to as low as 96.628 against a basket of major currencies in the wake of the Fed, the dollar was trading at 98.952 on Friday, down 0.1 percent on the day on track for its first week of falls in five.

The euro was 0.2 percent higher against the dollar at $ 1.0683, well below Wednesday’s high above $ 1.10 but still leaving the single currency on track for its best weekly performance since September 2013 with a 1.7 percent rise.

“The FOMC announcement was, on margin, more dovish than expected. So the weakness that we saw in the dollar in the aftermath of that translated into some rebounds in euro/dollar,” said Phyllis Papadavid, senior global FX strategist at BNP Paribas in London.

Papadavid said she expected the euro downtrend to resume, and BNP Paribas yesterday revised down their euro forecasts to parity with the dollar by the end of this year from $ 1.05 previously and to $ 0.95 by the second quarter of 2016.

But an overwhelming consensus among major banks that the euro will continue to fall against the dollar found a doubter on Thursday. In contrast to a slew of downward euro revisions, British bank HSBC on Thurday revised up its forecast for the single currency to $ 1.20 by 2017.

Against the yen, the dollar was 0.1 percent higher at 120.88 yen, comfortably above its Wednesday post-Fed low of 119.29.

“Pressure will remain on the yen as before. Today, there is a shortage of fresh trading incentives, so the yen has come back a bit,” said Ayako Sera, market strategist at Sumitomo Mitsui Trust Bank in Tokyo.

The Bank of Japan stood pat on policy earlier this week, as it has every month since expanding its massive stimulus programme in October last year.

(Additional reporting by Lisa Twaronite in Tokyo; Editing by Toby Chopra)

Euro continues to probe 12-year lows, U.S. data awaited for cues

By Shinichi Saoshiro and Ian Chua

TOKYO/SYDNEY (Reuters) – The euro slumped to a new 12-year low on Thursday, reeling from an unrelenting onslaught after the European Central Bank startedits quantitative easing (QE) campaign, highlighting the monetary policy divergence between the euro zone and the U.S.

The 1 trillion euro bond-buying program the ECB launched on Monday by has dented the common currency’s appeal by driving yields of many euro zone bonds deeper into negative territory and others to all-time lows.

A 30-year German bond now offers a yield below that of a two-year U.S. Treasury note .

The euro fell as far as $ 1.0505 , the lowest since March 2003. A further slide would only heat up talk of parity with the dollar, a phenomenon last witnessed in 2002. The euro was last at $ 1.0511.

Furthermore, developments in Greece did the euro no favors, with Athens appearing to have made no headway in persuading euro zone partners to renegotiate terms of a 240 billion euro bailout.

The market awaited U.S. indicators including retail sales due later in the session to see if the latest data can reinforce the notion of an earlier interest rate hike by the Federal Reserve, a notion that has given the dollar such kick since last Friday’s robust employment numbers.

The plight of the euro, which has coincided with a rise in euro zone equities with Germany’s DAX <.GDAXI> scaling record highs, drew comparisons with what the yen experienced when the Bank of Japan unleashed its own bond buying-driven QE scheme.

The BOJ began its current QE program in April 2013 and enhanced it in October 2014. The dollar has soared from 93 yen to around 122 yen while the Nikkei share average <.N225> has climbed an eight-year peak since the QE launch.

“The situation is identical to what has taken place in Japan, when investors like foreign players sold the yen and bought stocks. Under ECB’s easing, prospects for euro zone shares are good while the euro looks bleak. Selling the euro and buying shares becomes a natural combination,” said Koji Fukaya, president at FPG Securities in Tokyo.

Against sterling, the euro fell to its lowest in over seven years at 70.11 pence . It slumped to a near two-year trough 127.64 yen .

The dollar index <.DXY> came within a whisker of 100.00 for the first time since April 2003. Versus the yen, the greenback traded at 121.64 , not far off an eight-year peak of 122.04 set on Tuesday.

Elsewhere, 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.

“When you look through the statement, the threshold for cutting the cash rate right now is perhaps a little bit higher than what markets have been anticipating,” said Nick Tuffley, economist at ASB Bank.

The kiwi fetched $ 0.7294 after pulling away from a five-week trough of $ 0.7191 struck overnight.

The Australian dollar traded at $ 0.7577 , drawing a small lift from a moderate rise in Australian employment but still in proximity of a six-year low of $ 0.7561 hit overnight.

(Editing by Shri Navaratnam and Eric Meijer)

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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FOREX-Dollar rallies to multiyear peaks vs euro, yen as cenbank moves eyed

* Euro falls below $ 1.07 for first time in nearly 12 years

* Dollar hits nearly 8-year peak against yen

* Expectations of mid-year Fed rate hike support dollar

* ECB QE program sends European yields, euro lower

* Greek concerns begin to return for euro (Recasts; adds comments, updates prices)

By Sam Forgione

NEW YORK, March 10 (Reuters) – The U.S. dollar hit a near 12-year peak against the euro and touched its highest level against the Japanese yen in nearly eight years on Tuesday, buoyed by the European Central Bank’s bond-buying program as well as expectations for a mid-year Federal Reserve rate hike.

The dollar index, which measures the greenback against a basket of major currencies, hit its highest since September 2003, while the euro fell as low as $ 1.06925, a level last reached in April 2003. The euro also hit 129.480 yen , its lowest since August 2013.

“The U.S. numbers seem to be supporting the Fed raising rates in 2015,” said Douglas Borthwick, managing director at Chapdelaine Foreign Exchange in New York, referring to recent U.S. economic data. He said last Friday’s strong U.S. jobs report for February was the “nail in the coffin” for the Fed hiking this year.

The launch of the European Central Bank’s quantitative easing operation on Monday drove European yields lower and weakened the euro. A research note from Deutsche Bank on Tuesday forecast that the euro would hit parity with the dollar by year-end, 90 U.S. cents by 2016 and 85 cents by 2017.

Against the yen, the dollar hit 122.040 yen – its strongest level since July 2007. The greenback also hit parity with the Swiss franc for the first time since the Swiss National Bank scrapped a 1.20 francs per euro cap on Jan. 15.

In emerging markets, the dollar hit 15.6452 pesos, its highest against the Mexican peso since at least 1989, and its highest in nearly 11 years against the Brazilian real at 3.1722 reais.

“What looked good with the Fed at zero rates doesn’t look good when the Fed starts tightening,” said Win Thin, currency strategist at Brown Brothers Harriman in New York, in reference to higher-risk emerging market currencies.

Renewed concerns about Greece’s finances also weighed on the euro. The dollar briefly pared gains 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 trading down 1.42 percent against the dollar at $ 1.0700. The dollar was mostly flat against the yen at 121.135 yen and last up 1.32 percent against the Swiss franc at 0.99895 franc.

The dollar index was last up 1.03 percent at 98.589.

(Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; editing by Meredith Mazzilli, G Crosse and Richard Chang)

FOREX-Dollar rallies on ECB easing, expected mid-year Fed rate hike

* Dollar hits nearly 12-yr high vs euro, 8-yr peak against yen

* Expectations of mid-year Fed rate hike support dollar

* ECB QE program sends European yields, euro lower

* Greek concerns begin to return for euro (Recasts throughout, updates prices, adds comments; changes byline, dateline, previous LONDON)

By Sam Forgione

NEW YORK, March 10 (Reuters) – The U.S. dollar hit a fresh nearly 12-year peak against the euro and its highest level against the Japanese yen in nearly eight years on Tuesday on expectations for a mid-year Federal Reserve rate hike and the European Central Bank’s bond-buying program.

The dollar index, which measures the greenback against a basket of major currencies, hit its highest since September 2003. The euro fell to $ 1.07205, its lowest level since April 2003, before paring losses. The euro also hit 129.965 yen , its lowest level against the yen since September 2013.

“We’re seeing a generally hawkish tone out of the Fed,” said Chris Gaffney, president of EverBank World Markets in St. Louis.

“There is a real desire from the Fed to just start the process, to get rates off zero,” he said.

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.

The dollar hit 122.040 yen, its strongest level since July 2007. The greenback also hit 0.98605 franc, its highest since the Swiss National Bank scrapped a 1.20 francs per euro cap on Jan. 15.

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.

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 1 percent against the dollar at $ 1.07450. The dollar was last down 0.06 percent against the yen at 121.085 yen. The dollar was last up 1.11 percent against the Swiss franc at 0.99690 franc.

The dollar index was last up 0.72 percent at 98.292.

(Reporting by Sam Forgione; Additional reporting by Patrick Graham in London; Editing by Meredith Mazzilli)

Euro Slides Ahead Of ECB Rate Decision

CANBERA (dpa-AFX) – The euro weakened against the other major currencies in the late Asian session on Thursday, as traders waited for European Central Bank monetary policy announcement for details about the quantitative-easing program measure announced in January.

At a European Central Bank meeting due later in the day, president Mario Draghi will unveil the details of its 1.1 trillion euro ($ 1.23 trillion) bond-buying quantitative easing program, as part of a drive to get inflation back toward its target of just below 2 percent. The ECB will also release new economic forecasts, with many expecting that the growth forecasts would likely be revised upwards after factoring in a cheaper euro and falling energy prices.

Traders also look forward to Friday’s U.S. jobs data for further confirmation that the world’s largest economy is recovering enough to justify a rate hike. In prepared remarks to the Senate Banking Committee last week, Federal Reserve Chair Janet Yellen said that it was “unlikely” that economic conditions would warrant an interest rate increase for “at least the next couple of meetings”.

Meanwhile, most of the Asian stocks traded lower as China, the world’s second-largest economy, lowered its economic growth forecast for 2015 to about 7 percent. Investors were also trading cautious ahead of ECB meeting due later.

In the late Asian trading today, the euro fell to 1.1025 against the U.S. dollar for the first time September 2003. At yesterday’s close, the euro was trading at 1.1075 against the greenback. The euro may test support near the 1.09 region.

Against the Canadian dollar, the euro slipped to 1.3717 for the first time since September 2013. The pair was trading at 1.3763 at yesterday’s close. On the downside, 1.32 is seen as the next support level for the euro.

Against the Australian dollar and the yen, the euro fell to more than a 5-week low of 1.4112 and nearly a 5-week low of 132.14 from yesterday’s closing quotes of 1.4168 and 132.52, respectively. The euro is likely to find support around 1.39 against the aussie and 130.09 against the yen.

The euro edged down to 0.7239 against the pound and 1.0651 against the Swiss franc, from yesterday’s closing quotes of 0.7256 and 1.0667, respectively. If the euro extends its downtrend, it is likely to find support around 0.69 against the pound and 0.96 against the Swiss franc.

Looking ahead, Markit’s Germany construction PMI and Eurozone retail PMI – both for February are set to be published in the European session.

The Bank of England will announce its interest rate decision at 7:00 am ET. Economists expect the bank to retain interest rates unchanged at 0.50 percent and asset purchase target at GBP 375 billion.

The European Central Bank will announce its interest rate decision at 7:45 am ET. Economists expect the bank to retain interest rates unchanged at 0.05 percent.

Following the announcement, central bank President Mario Draghi will hold the customary post-meeting press conference in Cyprus at 8:30 am ET.

In the New York session, U.S. weekly jobless claims for the week ended February 28, factory orders for January and Canada Ivey’s PMI for February are slated for release.

At 10:00 am ET, U.S. Federal Reserve Bank of San Francisco President John Williams will deliver a speech about the economic outlook at the Chartered Financial Analysts Society Hawaii 10th Annual Economic Forecast Dinner, in Honolulu.

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