FOREX-Dollar pummelled after Singapore widens FX band

* Singapore widens trading band for Singapore dollar

* Euro rises above $1.4100, highest in more than 8 months

* Aussie flirts with parity, dollar-index hits 2010 low

(Changes dateline, adds quote, detail, previous TOKYO)

By Neal Armstrong

LONDON, Oct 14 (BestGrowthStock) – The U.S. dollar index (Read more about the global trade. ) hit the
year’s low on Thursday while the Australian dollar flirted with
parity after Singapore widened its currency’s trading band,
piling more pressure on to the struggling greenback.

The Australian dollar, which boasts the highest yield among
major currencies and with close links to Asian currencies,
soared to a 28-year peak at $0.9994 (AUD=D4: ) as investors
continued to dump the U.S. dollar on expectations the Federal
Reserve will start further money-printing next month.

The move by Singapore to widen the trading band of the
Singapore dollar, which hit a new record high, prompted a clean
break by the euro through $1.4000, triggering euro buy orders
and drawing model accounts into the fray.

With interest rates at record lows in developed markets,
yield-hungry investors are piling cash into emerging markets.
The tide of money is rising ahead of an anticipated second round
of quantitative easing by the Fed.

The dollar index (Read more about the global trade. ) (.DXY: ), which tumbled 1 percent to its
weakest since December at 76.259, is on course for a test of
trendline support at 75.95, with its November low of 74.17 then
not far away. The 75.95 target is the trendline from two major
lows in July 2008 and in November 2009.

The euro, which surged above $1.4100 in early European
dealing, faces resistance at $1.4195 in its sights, the January
25 high.

With key levels having broken in most major currency pairs,
investors were focused on the Australian dollar’s assault on
parity.

“The Aussie rally is being driven by strength in the
Australian economy together with supply and a general
depreciation of U.S. dollars. There are barriers at parity but
it’s difficult to see the trend changing,” said Lauren
Rosborough, senior currency strategist at Westpac in London.

The Aussie traded at $0.9978 with traders saying option
barriers at $1.0000 were slowing the rally. It has gained more
than 11 percent so far this year and is up around 24 percent
from a low in May.

The dollar also hit the latest in a succession of record
lows against the Swiss franc (CHF=: ) and slid below parity with
the Canadian dollar (CAD=: ), a level not seen since April.

Commodities rallied as the dollar fell, with gold (XAU=: )
hitting a record high and silver (XAG=: ) climbing to its priciest
in 30 years. [ID:nSGE69D045]

The euro (EUR=: ) jumped above $1.4100 on trading platform
EBS, its highest in more than eight months. After failing to
crack $1.40 the previous session, its move caught some players,
who had been expecting more consolidation, by surprise as it
triggered stops around $1.4030 and then $1.4050.

CATALYST

Momentum picked up after Singapore widened the trading band
for its currency and said it would maintain modest and gradual
appreciation in the Singapore dollar. The Monetary Authority of
Singapore sets policy by managing the Singapore dollar in a
secret trade-weighted band against a basket of currencies,
instead of setting interest rates. [ID:nSFK000030]

The U.S. dollar fell, touching a record low of S$1.2888.

“Singapore raised its currency more than expected. That has
opened the possibility of more strengthening in Asian
currencies, including China, ahead of the G20 meetings,” said
Hideaki Inoue, forex manager at Mitsubishi Trust Bank.

The U.S. dollar fell 0.8 percent to a fresh 15-year low of
81.04 yen (JPY=: ), despite constant wariness about Japanese
intervention, nearing its record low of 79.75 hit in April 1995.

While traders think Japan could intervene at any moment to
keep the yen in check, some market participants speculated that
Tokyo may prefer to avoid intervention ahead of G20 meetings.

(Additional reporting by Hideyuki Sano)

FOREX-Dollar pummelled after Singapore widens FX band