* Dollar index hovers near previous day's 11-month peak
* U.S. services industry activity at 8-1/2-year high in July
* Kiwi dented by fall in dairy prices, mixed NZ jobs data
* Euro stuck near nine-month lows
(Updates prices, adds comments)
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, Aug 6 The dollar held near an
11-month high against a basket of major currencies on Wednesday,
supported by upbeat U.S. data, while the New Zealand dollar took
a hit from a fall in dairy prices.
The dollar index was last at 81.550, not far from
Tuesday's peak of 81.626. The euro eased 0.1 percent to $1.3368
, having plumbed a nine-month trough of $1.3358 on Tuesday.
Helping to support the dollar, data on Tuesday showed U.S.
services sector activity hit an 8-1/2 year high last month and
factory orders surged in June, bolstering expectations of solid
economic growth in the third quarter.
"We're back into the medium-term trend, which is for a
higher dollar," said Jesper Bargmann, head of trading for Nordea
Bank in Singapore.
Over time the euro is likely to head lower versus the
dollar, due to a divergence in the outlook for monetary policies
of the United States and the euro zone, he said.
Bargmann said that while the market was already short the
euro, he expects these bearish bets could grow further.
In addition to the European Central Bank's policy meeting on
Thursday, the focus will be on forthcoming U.S. economic data
and whether they come in strong enough to push forward market
expectations for the timing of a Fed rate hike, he added.
European data had been mixed on Tuesday. Euro zone retail
sales rose at their fastest rate in seven years in June and
business activity expanded at the second-fastest pace in three
years in July.
Yet the robust growth could not mask the deflationary
pressures weighing on the region, a clear worry for the ECB.
But having unveiled a raft of measures in June to spur growth,
the ECB is not expected to tinker with policy this month.
The dollar held steady versus the yen at 102.56. The
dollar had risen to as high as 102.93 yen on Tuesday but later
backed off, with the safe haven yen finding support as equities
retreated amid concerns over escalating tensions in Ukraine.
The standout currency in Wednesday's Asian trade was the New
Zealand dollar, which skidded to a two-month low after milk
prices fell again at an auction held by Fonterra Co-operative
Group, the world's biggest dairy exporter.
It extended its decline on data showing a moderation in jobs
growth at home, an outcome that some suspect could buy the
central bank more time to stay on the sidelines following four
successive interest rate hikes this year.
The latest retreat in equities and risk sentiment also
dented the New Zealand dollar, said Hamish Pepper, a currency
strategist for Barclays in Singapore.
"It's a confluence of factors, all negative for the kiwi
dollar at the moment," Pepper said, adding that a focal point is
whether support for the kiwi at its early June trough near $0.84
The kiwi dropped 0.4 percent to $0.8434, having
fallen as far as $0.8423, its lowest level in two months. It is
down more than 4.5 percent from a peak of $0.8839 touched last
(Editing by Shri Navaratnam)