FOREX-Dollar rebounds broadly, AUD and CAD off highs

Wed Mar 17, 2010 9:24pm EDT

* Dlr rebounds from Wednesday's lows on short-covering

* AUD falls from 8-wk high, CAD off 20-mth peak

By Satomi Noguchi

TOKYO, March 18 (Reuters) - The dollar rose broadly on Thursday, recovering some of its losses against higher-yielding currencies made the previous day, as investors trimmed short dollar positions.

The greenback had fallen on Wednesday after a benign inflation reading supported the Federal Reserve's renewed pledge to keep interest rates near zero for a few more months.

Short-term players trimmed their stretched dollar short positions against the Canadian dollar which hit a 20-month high the previous day, helped by higher oil prices.

The Australin dollar fell further from an eight-week peak the day before as regional stocks edged down despite a strong performance in U.S. stocks on Wednesday.

The U.S. central bank's commitment to an "extended period" of low interest rates is not yet in need of change, Dallas Fed President Richard Fisher said late on Wednesday.

Market players will closely watch comments expected to come later in the day from Kansas City Fed President Thomas Hoenig who dissented on the retention of that language, as well as U.S. consumer inflation readings for February.

The euro dipped 0.1 percent from late New York trade to $1.3720 EUR=, having come off a five-week high of $1.3819 on trading platform EBS the previous day.

The euro was struggling as other euro zone nations have yet to give concrete details on how they would help Greece resolve its financial woes. [ID:nLDE62G2LH]

The dollar index, a gauge of the greenback's performance against six major currencies, rose 0.2 percent to 79.831, rebounding from a six-week low of 79.507 struck on Wednesday .DXY.

The dollar was steady at 90.33 yen, remaining below a three-week high of 91.09 yen hit last week.

The Bank of Japan boosted its special fund-supply operation in a split-vote on Wednesday, disappointing market players hoping for more aggressive action. But the yen's reaction after the BOJ outcome was limited to a brief rise against other major currencies. [ID:nSGE62G03I]

Traders said the yen is expected to be pinned near or below 90 to the dollar in the next two weeks as Japanese exporters rush to repatriate earnings before the end of the month when the business year wraps up.

The Australian dollar fell 0.2 percent to $0.9222 AUD=D4, off an eight-week high of $0.9253 hit the previous day.

Against the Canadian dollar, the greenback rose 0.2 percent to C$1.0115 CAD=D4, rebounding above the C$1.0071 hit on Wednesday, its lowest since July 2008. (Editing by Joseph Radford)

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