FOREX-Dollar under pressure as Bernanke awaited for clues

* Dollar weak before Bernanke speech, inflation data

* Dollar index may test trendline near 76.00, then 2009 low

* 76.4 pct retrace of euro’s 2009-2010 drop lies at $1.4374

(Updates prices, adds quote)

By Jessica Mortimer

LONDON, Oct 15 (BestGrowthStock) – The dollar was near a 10-month
low against its currency basket on Friday with investors,
already bearish towards the greenback, awaiting a speech from
U.S. Federal Reserve head Ben Bernanke for more clues on
monetary easing.

Bernanke’s speech at 1215 GMT is expected to give pointers
on how aggressive the Federal Reserve’s anticipated quantitative
easing will be next month, while soft U.S. inflation data at
1230 GMT would likely add to the case for looser policy.

Retail sales for September are also due and will give an
indication how consumer demand is holding up. [ID:nN14141178]
(ECONUS: )

The euro was just below its highest level in more than eight
months against the greenback, while the Australian dollar
(AUD=D4: ) hovered close to a 28-year peak, with traders reporting
euro buying by Asian central banks and real money accounts.

“There is growing expectation that he (Bernanke) may provide
more clarity on the Fed’s proposed QE2 today … The criteria
for perceived success are important to provide a guide as to
when it may end,” a London-based trader said.

“The dollar is likely to continue to weaken if the market
feels that the Fed will just keep going”.

The U.S. Treasury Department is also expected to issue a
report on the currency practices of other countries on Friday.
The U.S. administration faces a tough call on whether to label
China a currency manipulator, a move that could throw a wrench
into Sino-U.S. relations. [ID:nN14134313]

At 1140 GMT, the dollar index (Read more about the global trade. ) was down 0.20 percent at
76.497, near a 10-month low of 76.259 hit the previous day. It
has support at about 76.00, roughly where a trendline from lows
in July 2008 and November 2009 now lies. If it breaks that, the
next target is the November low at 74.17.

The dollar reversed a brief recovery during Asian trade when
investors trimmed short positions.

The euro was flat at $1.4083 (EUR=: ), having hit a high for
the day of $1.4113, just shy of an eight-month peak of $1.4123
hit on Thursday.

Upside targets for the euro include a late January high at
$1.4195 and then $1.4374, the 76.4 percent retracement of the
euro’s slide from its November 2009 peak down to a trough hit in
June.

“Bernanke should give some indication of the shape and size
of the stimulus. If either that or the inflation numbers
disappoint then the dollar will definitely go lower,” said
Ankita Dudani, currency strategist at RBS.
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“Currencies: Race to the Bottom” PDF:

http://r.reuters.com/gez77p
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SUSTAINED REBOUND UNLIKELY

Analysts said a sustained dollar rebound seems unlikely at
this point, especially given the prospects of further balance
sheet expansion by the Federal Reserve.

“I think the dollar will be on the defensive ahead of any
expected QE announcements at the Fed meeting in November,” said
Daragh Maher, deputy head of global foreign exchange research at
CIB. “True, the dollar’s fall has been swift, but the bargain
hunters do not appear to have any conviction in driving it up.”

In contrast to the Fed’s hints at QE, the European Central
Bank has stood firm on plans for an exit from extraordinarily
loose monetary policy. Data on Tuesday showed more expensive
fuel boosted euro zone inflation in September, though core
inflation stayed subdued. [ID:nBRLFLE67B]

The Australian dollar was flat at $0.9937, having hit a
28-year peak just short of parity at $0.9994 on Thursday.

The U.S. dollar dipped 0.3 percent to 81.18 yen (JPY=: ). It
hit a 15-year low of 80.88 yen on Thursday, only about 1 yen
above its record low of 79.75 set in April 1995, keeping the
market nervous about the possibility of more Japanese
intervention.

Japanese Finance Minister Yoshihiko Noda said on Friday
Japan would continue to take decisive steps on currencies
regardless of Group of Seven or G20 meetings. [ID:nTOE69E00B]

(Additional reporting by Anirban Nag; Editing by John
Stonestreet)

FOREX-Dollar under pressure as Bernanke awaited for clues