* Euro climbs to highest level vs dollar since mid-February
* Yen firm as stocks drop, emerging currencies sell off
* Near-term focus on Fed minutes due Wednesday
* New Zealand dollar slides against dollar
By Wanfeng Zhou
NEW YORK, Aug 20 The U.S. dollar fell against
major currencies on Tuesday, hitting a six-month low against the
euro, as Treasury yields retreated and the timing of the Federal
Reserve's reduction of its stimulus efforts remained uncertain.
The U.S. currency fell against the yen and the Swiss franc,
with investors choosing these safe-haven currencies as global
shares retreated and emerging market currencies endured another
wave of selling.
U.S. 10-year bond yields dropped after hitting two-year
highs in the previous session on anticipation of Fed tapering of
its bond-buying. The release of its July meeting minutes on
Wednesday could provide clues to whether the central bank will
pare back those purchases in September.
"Fed uncertainty, mixed messages on the U.S. economy and
U.S. interest rates below recent peaks gnawed at the greenback,"
said Joe Manimbo, senior market analyst at Western Union
Business Solutions in Washington, D.C.
"Minutes that suggest the economy is not quite in 'taper
shape' would leave the greenback vulnerable."
The dollar index, a measure of the dollar's value against a
basket of six currencies, fell 0.4 percent to 80.865.
In thin trade, the euro rose 0.7 percent to $1.3426
as the 10-year yield premium that U.S. Treasuries
offer over German Bunds narrowed. The euro had
reached a session peak of $1.3452, according to Reuters data,
its highest since Feb. 14.
Mankash Jain, head of FX and investment management at Solo
Capital, a London-based hedge fund, said volumes are nearly 50
percent lower than in April, so price moves can get exaggerated.
"To us, any dip in the dollar offers a buying opportunity,
especially against the yen, the Swiss franc, the euro and the
Many investors believe the Fed remains likely to be the
first among major central banks to unwind its liquidity program.
That, combined with an improving U.S. economy and rising risk
aversion, should favor the dollar.
The dollar fell 0.4 percent to 97.13 yen. Weakness in
global stocks along with a selloff in emerging market currencies
on fears of a Fed move next month have supported the Japanese
The dollar also slid 0.7 percent to 0.9174 Swiss franc
"Investors are risk-averse going into the Fed minutes and
until they get a clear direction we are likely to see these
conditions prevail," said Simon Derrick, head of currency
research at Bank of New York Mellon.
Subdued risk appetite hurt higher-yielding, growth-linked
currencies. The Australian dollar fell 0.3 percent to $0.9081
The New Zealand dollar slid 1.1 percent to $0.7979
after the central bank there announced home lending restrictions
and said the currency was overvalued.
Emerging market currencies tumbled as jitters about the
future of U.S. stimulus have badly affected the emerging assets
of Asia. Investors fear an end to cheap money and an improvement
in the performance of advanced economies will reverse a flow of
The Indian rupee fell to a fresh record low, forcing
the central bank to intervene in the market while the Indonesian
rupiah hit fresh four-year lows.