FOREX-Dollar slips on lower expectations of Fed rate hike, yen gains

Wed Jun 11, 2014 10:47am EDT

* Dollar slips on changed Fed rate hike views

* Yen advances on few signs of Bank of Japan easing

* New Zealand, Australian dollars gain (Updates prices, adds new analyst comments, changes byline; dateline from pvs LONDON)

By Sam Forgione

NEW YORK, June 11 (Reuters) - The dollar slipped broadly on Wednesday for the first time in four sessions after traders dismissed expectations of an early Federal Reserve rate hike as premature, while the yen advanced on few signs of further easing from the Bank of Japan.

Traders abandoned the notion that strong U.S. economic data and hawkish comments from a Federal Reserve official would prompt a less accommodative stance at the central bank's meeting next week. U.S. government bond yields edged lower, which also weighed on the dollar.

"I doubt that the FOMC is going to send any signals next week," said Sireen Harajli, currency strategist at Mizuho Corporate Bank in New York. She said the impact of hawkish comments from St. Louis Federal Reserve bank president James Bullard on Monday had worn off.

The euro was slightly weaker against the dollar on the day, and hovered near a four-month low of $1.3503 set last Thursday soon after the European Central Bank cut rates to record lows.

The ECB's move continued to weigh on the currency, which traders sold in favor of the yen and higher-yielding currencies such as the Australian and New Zealand dollars. Traders said that little sign of further Bank of Japan easing boosted the Japanese yen.

"Further Bank of Japan easing has been seen as delayed, partly because the economic data is better than expected," said Sebastien Galy, currency strategist at Societe Generale in New York. Recent data showed Japan's economy grew an annualized 6.7 percent in the first quarter, beating initial estimates.

The U.S. dollar index, which measures the U.S. dollar against a basket of six major currencies, slipped 0.07 percent to 80.756. The euro was last down 0.07 percent against the dollar at $1.3538.

The dollar marked a more than one-week low against the yen , falling 0.32 percent against the Japanese currency. The euro was last down 0.39 percent against the yen at 138.085 as traders sold the shared currency to buy yen.

The New Zealand dollar was last up 0.3 percent at $0.855 , marking its highest level in nearly two weeks, while the Australian dollar was last up 0.2 percent at $0.9389.

Benchmark 10-year U.S. Treasury notes were last up 3/32 in price to yield 2.626 percent, ending three consecutive sessions of rising yields.

Traders also said a lack of U.S. economic data made the U.S. dollar more vulnerable to weakness and drove a hunt for higher-yielding currencies.

(Reporting by Sam Forgione; Additional reporting by Anirban Nag in London; Editing by Meredith Mazzilli)

FILED UNDER: