FOREX-Dollar weak before Bernanke, US inflation data

* Dollar weak; wariness before Bernanke, 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; changes byline, dateline; previous TOKYO)

By Jessica Mortimer

LONDON, Oct 15 (BestGrowthStock) – The dollar stayed under pressure
on Friday, hovering near a 10-month low versus a currency basket
as investors seeking more clues on likely U.S. monetary easing
awaited a speech by Federal Reserve head Ben Bernanke and
inflation data.

Bernanke’s speech at 1215 GMT is expected to give pointers
on how aggressive the Federal Reserve’s anticipated easing will
be next month, while soft inflation at 1230 GMT would add to the
case for looser policy. [ID:nN14141178] (ECONUS: )

The euro was just short of 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.

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

“We saw some correction in the dollar, but people have been
buying dips because they don’t see the correction being
sustained,” said Ankita Dudani, currency strategist at RBS.

“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,” she said,
though even firmer than expected inflation would not change the
bigger picture.

At 0909 GMT, the dollar index (Read more about the global trade. ) was down 0.2 percent at
76.479, 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 euro edged up 0.1 percent to $1.4089 (EUR=: ), 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.

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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.

“I think that might be pretty hard, at least until the
FOMC,” said Koji Fukaya, chief currency strategist at Credit
Suisse Securities in Tokyo, referring to the Fed’s policy
meeting in November.

The Australian dollar was steady at $0.9941, having hit a
28-year peak just short of parity at $0.9994.

The U.S. Treasury Department is also expected to issue a
report on 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]

The dollar dipped 0.3 percent to 81.23 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 yen set in April 1995, keeping the market
nervous about the possibility of more Japanese intervention to
curb yen strength.

“If we get anywhere close to 80 the BOJ (Bank of Japan)
might be tempted to come in,” said Gareth Berry, FX strategist
at UBS in Singapore.

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 Masayuki Kitano in Tokyo; Editing
by John Stonestreet)

FOREX-Dollar weak before Bernanke, US inflation data