FOREX-Dollar ekes out modest gains, choppy times ahead

* Dollar index inches higher, euro cedes more ground

* Market awaits a host of Fed speakers for clues on QE

(Updates prices; changes byline, dateline; previous TOKYO)

By Anirban Nag

LONDON, Oct 19 (BestGrowthStock) – The dollar gained against a
basket of currencies on Tuesday, backed by worries among some
players that the monetary easing expected from the U.S. Federal
Reserve next month is already largely priced in.

U.S. Treasury Secretary Tim Geithner’s comment that the
United States would not engage in dollar devaluation and needed
to work hard to preserve confidence in a strong dollar, also
offered some support to the ailing greenback. [ID:nN18287076]

“Comments from Geithner and a reversal in short dollar
positions is pushing it higher,” said Gareth Berry, currency
strategist at UBS, Singapore. “But this will not last too long
with many waiting to see what the Fed will do next month.”
Investors have been selling the dollar for weeks on
expectations the Federal Reserve will decide to pump more cash
into the U.S. economy at its Nov. 2-3 meeting.

But currencies like the euro and the Australian dollar that
had broken higher ground against the dollar are giving up some
of those gains — suggesting markets think much of the trade is
done.

But the market still has to wait and see how sizeable the QE
will actually be. Until then, traders and analysts said
short-term players were simply flipping positions within tight
ranges.

The dollar index (Read more about the global trade. ) (=USD: )(.DXY: ) firmed 0.5 percent to 77.34.
Technical analysts say it needs to extend above its Oct. 12 high
of 77.93 to signal a short-term bottom is in place after
Friday’s 10-month trough of 76.144.

A host of speakers from the Fed are due to speak on Tuesday.
More and more policymakers are signing up for QE, so any
indications on how far the U.S. central bank will go to
stimulate the economy could weigh on the dollar.

Fed Chairman, Ben Bernanke, is scheduled to give brief
remarks while New York Fed President William Dudley, Chicago Fed
chief Charles Evans, Atlanta Fed chief Dennis Lockhart,
Minneapolis Fed President Narayana Kocherlakota and Dallas Fed
President Richard Fisher are expected to speak later in the day.

G20 EFFORTS

Analysts said Geithner’s comments on the U.S. dollar ahead
of the G-20 meeting meant the U.S. was probably trying to work
out an agreement with emerging economies which would ease the
currency tensions that have marked the past few weeks.

“We are seeing the U.S. give up some ground as his comments
indicate that QE may be a gradualist approach and Asian
economies need not worry too much about a falling dollar,” said
Ian Stannard, senior currency strategist at BNP Paribas.

“A gradual approach to QE will have a less impact on the
dollar.”

A number of Asian and emerging countries have stepped up
intervention or imposed capital controls to stem a rapid
appreciation in their currencies against the dollar which many
feel can harm exports.

The euro (EUR=: ) dipped 0.24 percent to $1.3912, well below
Friday’s eight-month high, with investors awaiting the
influential German ZEW survey for October.

The euro has so far failed to clear $1.4000 again since
Friday’s surge above $1.4100. This was seen by some as a warning
that more long euro/short dollar positions could unwind, with
the euro’s Oct. 12 low of $1.3775 (EUR=: ) seen as a possible
target.

The dollar edged up 0.12 percent against the yen to 81.35
yen (JPY=: ), creeping further away from a 15-year low of 80.88
hit last week and a record low of 79.75 set in 1995.

Earlier in the day, there was talk of dollar selling by
Japanese exporters at levels near 81.30 yen.

The Australian dollar (AUD=D4: ) fell 0.13 percent to $0.9885,
paring earlier losses after the Reserve Bank of Australia’s
minutes from its Oct. 5 meeting said the arguments to hold or
hike rates were finely balanced.

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For Aus GDP graphic http://link.reuters.com/syh88p

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(Additional reporting by Masayuki Kitano in Tokyo; Editing by
Patrick Graham)

FOREX-Dollar ekes out modest gains, choppy times ahead