FOREX-Dollar down broadly, hits 7-1/2-month low vs Swiss franc
* Fed taper uncertainty, U.S. budget weigh on dollar
* BoE's Carney says no case for QE at moment
* Yen up after Japan minister remarks on corporate tax rate
* Swiss franc at three-month high versus euro
NEW YORK, Sept 27 (Reuters) - The dollar fell across the board on Friday, hitting a 7-1/2-month low against the safe-haven Swiss franc, as wrangling over the U.S. budget and a lack of clarity over when the Federal Reserve will scale back stimulus curbed demand for the greenback.
The dollar also fell against the yen after Japanese Finance Minister Taro Aso said he was not thinking of lowering the effective corporate tax rate now. That surprised investors who had positioned for a weaker yen on expectations of more fiscal stimulus to prop up the economy.
Sterling, meanwhile, rose to $1.6137 against the dollar , a one-week high, after Bank of England Governor Mark Carney was quoted as saying he saw no need for more bond-buying by the central bank given signs of recovery in the British economy.
All of these factors pushed the dollar index down 0.4 percent to 80.205, not far from a recent seven-month low of 80.060 struck after the Fed decided last week to maintain its bond buying program at $85 billion a month.
The more immediate focus, however, was the looming Oct. 1 deadline on the U.S. budget. U.S. congressional officials must come up with a deal by that date or risk a government shutdown.
"As this deadline approaches, investors are stepping up their sale of dollars on the growing concern that a government shutdown will undermine the quality of U.S. assets and lead to a retrenchment in U.S. growth," said Kathy Lien, managing director at BK Asset Management in New York.
The dollar fell to 0.9018 Swiss franc, its lowest since early February, with the franc also boosted by solid Swiss sentiment data. It was last at 0.9045, down 0.6 percent. The euro fell against the franc, dropping to a three-month low of 1.2075 francs, hurt partly by rising Italian bond yields.
But the euro rose 0.4 percent against the dollar to $1.3540 .
U.S. House of Representatives Republicans on Thursday refused to give in to President Barack Obama's demand for straightforward bills to run the government beyond Sept. 30 and to increase borrowing authority to avoid a default.
CLOUDY FED OUTLOOK
Beyond the budget impasse and month- and quarter-end flows, investors are focused on Fed meetings in October and December, with some expecting the U.S. central bank to hold off on reining in stimulus until early 2014 to make sure the U.S. recovery is firmly on track.
"While we maintain a positive medium-term outlook for the dollar, signs of more definitive upside momentum for the greenback will have to wait until Washington has overcome its budget hurdles and until U.S. economic data suggests that the U.S. economy is sufficiently self-sustaining for quantitative easing to be reduced," said Jane Foley, senior currency strategist at Rabobank in London.
Against the yen, the dollar fell 0.7 percent to 98.31 yen with stop-loss sell orders cited at 98.20. The yen edged higher against other currencies as well after Aso's comments.
His comments came after the Kyodo news agency reported Thursday that the Japanese government planned to say it would "urgently consider" cutting the corporate tax rate when it compiled a stimulus package next week.
The issue of whether Japan will lower the effective corporate tax rate has been weighing on the yen, which has slid this year on the back of Japanese Prime Minister Shinzo Abe's push to reflate the economy through steps such as aggressive monetary stimulus and pro-growth structural reforms.
"The government will likely implement some form of fiscal stimulus but clearly it won't include a corporate tax rate cut immediately," said Derek Halpenny, European head of global market research at Bank of Tokyo Mitsubishi.
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