* New Zealand dollar slips as Fonterra cuts payout forecast
* Sterling down again vs dollar, lowest since mid-June
* Dollar index holds near six-month peak
* Fed, U.S. GDP, payrolls key tests for markets this week
(Updates with UK data, more quotes)
By Patrick Graham
LONDON, July 29 Sterling fell to a six-week low
against the dollar on Tuesday while the New Zealand dollar
dropped almost half a percent as thin summer currency markets
marked time before a slew of U.S. data due later in the week.
Other major currency pairs were stuck in tight ranges, with
the dollar holding close to six-month peaks against a basket of
currencies ahead of data and policy releases starting with GDP
and a Federal Reserve statement on Wednesday.
The yen weakened briefly past 102 yen per dollar,
with some traders pointing to a warning from Russia that plans
to impose sanctions would harm relations between Moscow and
The kiwi was down 0.45 percent at $0.8508, its
weakest since June 10, after dairy giant Fonterra slashed its
forecast payout to farmers in the new season by 14 percent.
"This is all about the dairy market and a bit of carry over
from last week," said one London-based dealer. "We saw some
weakness yesterday as well but it recovered pretty quickly."
New Zealand is the only developed world economy where
interest rates have already risen, supporting solid gains for
its dollar this year. Rates are expected to remain on hold until
the end of 2014, however, as the central bank assesses the
impact on growth and inflation.
Stronger-than-expected UK mortgage data - which beat back
recent signs of housing sector weakness - provided only a brief
boost for the pound. At $1.6950, its lowest since June 18, it is
more than 2 cents off a near six-year high hit earlier in July.
While most analysts remain upbeat on Britain's economic
prospects the feeling is growing that the pound's year-long
rise, certainly against the dollar, may have come as far as it
"Despite recent data continuing to indicate the UK economy
is still a prosperous force to be reckoned with, the recent
flurry of articles on housing bubbles seems to have done enough
to dampen expectations of a rate rise this side of the new
year," South African bank Investec said in a note.
Sterling's fall to $1.6950 represented a break past support
at the 55-day moving average of $1.6956 and the 100-month moving
average of $1.6957.
The past fortnight has finally given some encouragement to
those hoping for a sustained run higher for the dollar that
might revive trading volumes and volatility. The latter, a key
driver of profits for bank dealing rooms, have been stuck at
long-term lows for months.
The Fed's policy statement on Wednesday, along with second
quarter gross domestic product numbers and non-farm payrolls on
Friday, offer the best hope of new direction on that move.
The dollar index, which measures the greenback's value
against a basket of major currencies, held steady at 81.030
. It hit 81.084 late last week, its highest level since
early February. The euro was steady at $1.3437, pinned
near an eight-month trough of $1.3421 set on Friday.
"You're seeing the euro capped at around $1.3450 ahead of
tomorrow's events," said Stephen Gallo, a strategist with BMO in
London. "There is some hope that the result of this week's
outcomes in the U.S. will perpetuate the rally in the dollar."
(Editing by Nigel Stephenson)