FOREX-Dollar falls broadly, hits record low vs Swissie
(Changes byline, recasts, updates prices)
LONDON, Jan 14 (Reuters) - The dollar slid to record troughs versus the Swiss franc and seven-week lows against the euro and yen on Monday, on expectations that soft U.S. earnings reports this week will boost the need for more interest rate cuts.
The Federal Reserve is widely seen cutting rates in January by a half-point to 3.75 percent, and futures are pricing in the risk of a Fed rate cut even before the Jan. 29-30 meeting.
Although analysts say an inter-meeting cut is unlikely, expectation of such a move could get a boost in case of U.S. bank announcing big write-downs linked to the troubles in the subprime mortgage market and consequent global credit crunch.
In contrast, euro zone policymakers have remained hawkish, stressing upside risks to inflation.
"Fundamentally, the risk remains to the upside for euro/dollar -- it's more a matter of when we will get to the record highs seen in November," said Niels From, currency strategist at Dresdner Kleinwort in Frankfurt.
"Speculation of either a 50 basis point rate cut or an inter-meeting rate cut both would argue for broad based dollar weakness because it confirms that the Fed is really concerned about both the U.S. economy and also how large the impact will be on the financial industry."
The euro rose as high as $1.4908 according to Reuters data, breaching the $1.49 level for the first time in seven weeks and closing in on record highs of $1.4966 EUR=.
The dollar fell more than one percent to a record low of 1.0888 Swiss francs CHF=.
The Swissie tends to do well at times of risk aversion, thanks to its safe haven status and the unwinding of relatively risky carry trade bets funded by cheap borrowing in the franc.
The yen, another low-yielder and carry trade funding currency, rose to a 7-week high of 107.62 per dollar JPY=.
But despite some signs of carry unwinding, the high-yielding Australian dollar fared well, supported by record-high gold prices XAU= and strong domestic data.
Data showing rising inflation pressures and solid demand for workers in Australia reinforced expectations rates could rise next month from 6.75 percent, attracting yield-seeking investors.
The Aussie rose to a two month high of US$0.90 AUD=, while the New Zealand dollar also gained strongly NZD=.
