July 30, 2014 / 12:01 AM / 3 years ago

FOREX-Dollar bulls in charge ahead of GDP and Fed tests

* Dollar index near a six-month peak after another push higher

* U.S. Q2 GDP, Fed statement next in focus

By Ian Chua

SYDNEY, July 30 (Reuters) - The U.S. dollar hovered at a six-month peak against a basket of major currencies early on Wednesday, having pushed higher as investors continued to give the euro a wide berth.

Traders said there was no fundamental reason for the broad strength in the greenback but suggested month-end repatriation by U.S. corporates may have helped.

Dollar bulls are also holding out hope that U.S. second quarter gross domestic product will show the economy has rebounded from a very soft patch and that the Federal Reserve will provide some hints on when it will raise interest rates.

The dollar index was last at 80.208, having risen 0.2 percent on Tuesday, a modest move but a vast improvement from Monday's flat performance. It climbed as far as 81.245, a high last seen in early February and is back in the 81.000/81.482 band that had capped it over the past nine months.

"The dollar managed to mark a number of notable, bullish technical breaks versus its major counterparts despite the fact that Wednesday's Q2 GDP release and FOMC rate decision are likely to impact the greenback specifically - regardless of the outcome," said John Kicklighter, chief currency strategist at DailyFX.

"Speculators' complacency and contentedness will be put to the test."

The euro reached a fresh eight-month low of $1.3404, bringing the November trough of $1.3295 in view.

Against the yen, the common currency held relatively steady at 136.93, while the dollar popped above 102.00 for the first time in over three weeks.

Analysts polled by Reuters expect the U.S. economy to have grown at an annualised rate of 3.0 percent in the second quarter, turning around from a 2.9 percent contraction due in part to a harsh winter.

Traders said anything less than 3 percent will be taken as a negative and could send dollar bulls packing.

The Fed, meanwhile, is all but certain to cut its monthly bond-buying programme by another $10 billion, but the focus has already shifted to when it will start to lift interest rates.

This week's meeting, however, will conclude with only a statement and none of the theatre associated with a news conference, leaving markets to go through every sentence with a fine-tooth comb for subtle changes.

To cap the week off is the closely watched nonfarm payrolls report, which should show yet another month of healthy employment growth.

The dollar also gained ground against its Canadian peer, hitting a six-week high of C$1.0866, while sterling fell to a six-week trough of $1.6933.

The New Zealand dollar was among the worst major performers on Tuesday, having touched a seven-week low of $0.8495 after dairy giant Fonterra cut its forecast payout to suppliers in the new season.

The kiwi last traded at $0.8510. It has fallen a steep 3.7 percent from the July 10 peak of $0.8839 as the country's central bank jawboned the currency lower and paused its tightening cycle after four straight interest rate hikes. (Editing by Eric Meijer)

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