Tuesday November 4, 2014 - 00:14:49 GMT
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Reuters - www.reuters.com
FOREX-Dollar wins more fans, hits four-year high
* Dollar index at four-year highs
* Yen, euro under pressure; commodity currencies also hit
* Upbeat ISM contrasts with disappointing China, euro zone PMI
By Ian Chua
SYDNEY, Nov 4 (Reuters) - The dollar hovered at four-year highs early on Tuesday, having cemented its status as the favoured one as investors sought the greenback against just about every other major currency.
Traders said long dollar trades were a no-brainer in the current environment where the Bank of Japan and European Central Bank are keeping the stimulus tap running, while the Federal Reserve has just turned off its massive bond-buying program.
Persistent worries about slowing economic growth in China have also dented appetite for commodity currencies such as the New Zealand dollar, leaving the greenback a standout buy.
As a result, the dollar index has risen to highs not seen since June 2010. It last traded at 87.324, having earlier climbed as far as 87.406.
Against the yen, the greenback bought 113.85 yen, not far from a seven-year high of 114.21 set overnight and nearing the December 2007 peak of 114.66.
"Investors who missed the initial move are positioning themselves for the next lurch higher, and calls for USD/JPY at 120.00 abound," said Raiko Shareef, currency strategist at Bank of New Zealand.
The euro was changing hands at $1.2488, having slid to a two-year low of $1.2439 overnight. A break there could open up the path to the July 2012 trough of $1.2042.
Among commodity currencies, the New Zealand dollar dipped below 77 U.S. cents for the first time in nearly 15 months. The Canadian dollar was within a hair's breadth of a five-year low of U.S.$1.1385 set a few weeks ago.
Data on Monday only served to highlight the diverging fortunes of the United States and its peers, with accelerating U.S. manufacturing activity in sharp contrast to sputtering factories across Asia and the euro zone.
In China, manufacturing activity hit a five-month low and the euro zone continued to stagnate.
"We expect the U.S. jobs report on Friday to extend this theme further, with our economists forecasting a solid 245,000 increase in non-farm payrolls and an above-consensus 0.3 percent gain in average earnings," analysts at BNP Paribas wrote in a note to clients.
They said there was further scope for the dollar to extend gains versus the euro and yen this month, adding sterling will also likely outperform the duo as well.
Sterling hit a one-month high of 1.2819 euros on Monday after a survey showed British manufacturing surged unexpectedly last month.
The upbeat report was tempered, however, by a big fall in export orders due to sagging demand from the euro zone, a nagging worry that will no doubt dog sterling for months to come.
In Asia, Australian retail sales and trade data as well as the Reserve Bank of Australia's interest rate review will take centre stage later in the day.
The RBA is widely expected to leave its cash rate steady at 2.5 percent, where it has been since the last cut in August 2013. (Editing by G Crosse)
© Thomson Reuters 2014. All rights reserved.
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