* Dollar breaks out of August range
* All eyes on Fed minutes, Jackson Hole speeches
* Trade-weighted index at 11-month high, euro falls below
* Sterling propped up by central bankers favouring rate rise
(Updates prices, adds more comment)
By Patrick Graham
WARSAW, Aug 20 The dollar jumped on Wednesday to
its highest levels against the euro and a basket of major
currencies since last September, returning to gains after a
shaky start to August that called into question its broader
Two days of upbeat signals on the domestic housing market
have been enough to put the U.S. currency back on track and it
has now gained some 7 cents, or just under 5 percent, against
the euro since early May.
That again encouraged speculation that the longer-term rally
predicted at the start of this year by some of the biggest
investment houses may finally be under way as monetary policy in
Europe and the United States heads in opposite directions.
The greenback broke through resistance around $1.3300 and
last November's high of $1.3295 per euro to trade as high as
$1.3275 in morning trade in Europe. It also climbed to a 4
1/2-month high against the yen.
The only resistance came from sterling, propped up after a
rough couple of weeks by minutes that showed Bank of England
policymakers had broken ranks over interest rates for the first
time in three years, with two of them unexpectedly voting to
"The dollar can retain its bid tone into the end of the
week," said Stephen Gallo, a strategist with Canadian bank BMO
in London, pointing to rising U.S. housing starts on Tuesday and
steady US bond yields this week.
The dollar index rose as high as 82.118, its
highest since September. It last stood at 82.081, up a quarter
of a percent on the day.
The yen slid 0.4 percent to 103.33 yen per dollar and the
New Zealand dollar fell below support at levels near $0.8400 to
its lowest in more than five months.
The dollar has been helped by a recovery in U.S. 10-year
Treasury yields this week. They were last at 2.407 percent
, compared with a 14-month low of 2.303 percent last
Some market participants said the dollar's rise had more to
do with weakness in other major currencies.
Sterling rebounded from four-month lows against the dollar
after the Bank of England minutes showed both Martin Weale and
Ian McCafferty voted to start raising interest rates in August.
"It was clearly a relief to get a signal like this morning's
for the pound. It has relieved the pressure," said a dealer with
one London bank. "That said, I think the past month's action has
blown a hole in sterling's prospects. I think most people think
the rally we saw in the past year has topped out."
Sterling gained 0.2 percent against the dollar at $1.6649
and as much as half a percent against the euro at 79.775 pence
per euro in response.
The single currency, already undermined by a struggling euro
zone economy, has suffered from growing signs this month that
sanctions between the West and Russia will hurt growth more in
Europe more than in the United States.
Most analysts have cast this week as a pause, waiting for
the next signal from the U.S. Federal Reserve on how close it is
to raising interest rates next year, at a time when the European
Central Bank is under pressure to ease policy further.
Minutes of the Fed's July policy meeting are due later on
Wednesday, but 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.
"Our economists expect an overall dovish theme to persist
but are wary that a softening in the disinflationary rhetoric
might be in the offing given recent comments from FOMC members,"
RBC Capital Markets' Michael Turner said in a morning note.
"The main game for Fed communications remains the upcoming
Jackson Hole gathering."
(Editing by Crispian Balmer)