* Dollar index hits 11-month high thanks to dollar's broad
* Euro touches 9-month low; kiwi touches 5-month trough
* Dollar hits 4-month highs versus yen and sterling
(Updates prices, adds comments)
By Hideyuki Sano and Masayuki Kitano
TOKYO/SINGAPORE, Aug 20 The dollar touched an
11-month high against a basket of major currencies on Wednesday
after positive U.S. housing data the previous day fed hopes that
the world's biggest economy is strengthening.
The dollar index surged to as high as 81.995,
its highest level since September. It last stood at 81.974, up
0.1 percent on the day.
The greenback rose broadly, sending the euro to a nine-month
low, while the New Zealand dollar slid below support at levels
near $0.8400 and fell to its lowest level in more than five
The dollar also scaled four-month highs against yen and the
The dollar was boosted by the release of data on Tuesday
showing U.S. housing starts and building permits rebounded
strongly in July, suggesting the housing market recovery was
back on track after stalling in the second half of last year.
"There seems to be some dollar-buying on the back of a rise
in U.S. yields," said Satoshi Okagawa, senior global markets
analyst for Sumitomo Mitsui Banking Corporation in Singapore.
The U.S. 10-year Treasury yield last stood at 2.407 percent
, having edged up over the past few days from a
14-month low of 2.303 percent set last Friday.
Some market participants said the greenback's rise had more
to do with weakness in other major currencies, with the euro
staying on the defensive, while sterling extended its losses
after weaker-than-expected inflation data the previous day eased
pressure on the Bank of England to raise interest rates.
The euro fell 0.1 percent to $1.3306, having touched
a low of $1.3303, its lowest level since last November.
"I think it's more a function of European weakness... The
European recovery is stalling and as such the focus is on the
ECB doing more to support the economy," said Callum Henderson,
head of FX research for Standard Chartered Bank in Singapore.
Its latest drop has brought the euro's decline from its 2
1/2-year peak reached in May to almost five percent. The common
currency was hit by worries that tit-for-tat sanctions between
the West and Russia could hurt the euro zone economy more than
the United States because of its closer economic ties with
Even without the Ukraine crisis to contend with, the euro
zone recovery had been tepid at best as the currency bloc's
southern countries continue to struggle under the weight of
tight fiscal policy aimed at reducing their debt load.
"The euro looks particularly weak. Investment into the euro
zone could stall. I feel it's time to think that the euro will
fall below $1.30," said Kyosuke Suzuki, director of forex at
Against the yen, the dollar rose 0.2 percent to 103.15 yen
. It touched a high of 103.23 yen earlier on Wednesday,
the dollar's strongest level since April.
Next up for the dollar is the minutes of the Fed's July
policy meeting, due later on Wednesday, although a bigger focal
point may be Fed Chair Janet Yellen's speech on Friday at an
annual gathering of central bankers in Jackson Hole, Wyoming.
Sterling set a fresh four-month low of $1.6604, and
was last down 0.1 percent on the day at $1.6607.
The New Zealand dollar fell 0.4 percent to $0.8387,
having fallen to as low as $0.8373 earlier on Wednesday, its
lowest level since March.
(Editing by Shri Navaratnam and Simon Cameron-Moore)