* Euro hovers near 2-month high versus dollar
* Supported by hopes for details from ECB on bond buying
* Aussie dlr hits lowest in nearly 6 weeks, awaits RBA
By Masayuki Kitano and Ian Chua
SINGAPORE/SYDNEY, Sept 4 The euro rose against
the dollar on Tuesday, nearing a two-month high hit last week,
supported by hopes the European Central Bank will soon unveil
details of a plan to tackle the region's debt crisis.
The single currency rose 0.2 percent to $1.2615,
hovering close to a high of $1.26378 seen last Friday on trading
platform EBS, its strongest level since early July.
Traders said the paring back of bearish bets against the
euro probably helped bolster the single currency, and there was
also talk of euro buying by Asian players as well as euro buying
against the yen by Japanese players.
Helping support the euro were expectations that the ECB will
announce, after its policy meeting on Thursday, details of a
long awaited debt-buying scheme to help ease funding pressures
for stressed states.
Those hopes were given a boost on Monday after ECB President
Mario Draghi was reported as saying purchases of sovereign bonds
of up to three years maturity by the ECB did not constitute
With expectations running high ahead of Thursday's ECB
meeting, analysts said the euro could sag if there is any
The euro's downside against the dollar, however, could be
limited in the near term, with the greenback likely to be
weighed down by market speculation that the U.S. Federal Reserve
might decide to launch another bond buying programme, or
quantitative easing, as early as this month.
"I don't see a big drop in euro/dollar from here, given the
anticipation ahead of the Fed meeting," said Mitul Kotecha, head
of global foreign exchange strategy for Credit Agricole in Hong
Even if the ECB fails to live up to expectations and the
euro were to come under pressure, its drop may be limited to
levels just under the $1.25 level in the near term, he added.
The euro touched a two-month high against the Australian
dollar at A$1.2325 and rose 0.4 percent against the
yen to 98.88 yen.
Japanese importers were spotted buying the dollar against
the yen, helping the dollar edge up 0.1 percent to 78.37 yen
Investors continued to give the Australian dollar a cold
shoulder after data the previous day showed an unexpected fall
in domestic retail sales.
That added to the selling pressure against the Australian
dollar, which has retreated over the past month on worries about
a slowdown in China, Australia's single biggest export market.
The Aussie fell to as low as $1.0224, its lowest
level in nearly six weeks, before recovering a bit of ground. It
last changed hands at $1.0239, down 0.1 percent on the day.
The Reserve Bank of Australia meets later in the day but is
widely expected to keep interest rates unchanged. RBA Governor
Glenn Stevens has repeatedly said the effects of past rate cuts
are yet to be felt, suggesting he is in no hurry to act again.
"The AUD has underperformed in recent days as Chinese growth
concerns have continued to dominate, but the currency could get
a reprieve should today's RBA statement come in as neutral as
was seen at the last meeting," said Kiran Kowshik, strategist at