Tuesday September 9, 2014 - 00:01:13 GMT
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Reuters - www.reuters.com
FOREX-Dollar extends rally on Fed study, sterling woes
* Dollar index hits fresh 14-month highs
* USD rises above 106.00 yen for first time in six years
* Sterling still hamstrung by risk of Scotland independence
By Ian Chua
SYDNEY, Sept 9 (Reuters) - The dollar traded at 14-month highs against a basket of major currencies early on Tuesday, benefiting from a run in sterling and after a Federal Reserve study sparked more buying interest.
The dollar index climbed as far as 84.349, bringing into view the July 2013 peak of 84.753. A break there will take it to highs not seen since July 2010.
Giving bulls a boost, a research from the San Francisco Fed noted that investors are pricing in a lower trajectory for interest rate rises than members of the Fed itself.
"The market's interpretation is that perhaps it had better re-price those expectations," said Emma Lawson, senior currency strategist at National Australia Bank.
The greenback raced to a six-year high of 106.09 yen, while the euro slumped to a 14-month low of $1.2881. Investors were already giving the common currency a wide berth after the European Central Bank surprised on Thursday with a fresh round of stimulus.
Commodity currencies also ceded ground, with the Australian dollar dropping more than 1 percent to as low as $0.9276 . It last traded at $0.9279.
Sterling slid to a near 10-month low of $1.6092 amid ongoing jitters that Scotland could vote to secede from the United Kingdom.
A TNS poll on Tuesday showed a surge in support for those who wish to break away from the United Kingdom, just days after a YouGov poll for the Sunday Times put the "Yes" camp on 51 percent and "No" on 49 percent.
"We expect political concerns surrounding the September 18 Scottish independence referendum to dominate price action in the near term," analysts at BNP Paribas wrote in a note to clients.
"Our base case expectation remains that the 'No' camp will prevail... Still, we would be cautious on re-entering GBP longs ahead of the vote given our expectation that volatility will remain elevated."
Data showing British retail sales rose sharply in August failed to move sterling and analysts said even a good set of industrial and manufacturing output data later in the day is unlikely to save the pound.
In Asia, minutes of the Bank of Japan's August meeting are due later in the morning. (Editing by Shri Navaratnam)
© Thomson Reuters 2014. All rights reserved.
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