September 4, 2012 / 3:26 AM / 5 years ago

FOREX-Euro pushes higher on ECB hopes, Aussie eyes RBA

* Euro hovers near 2-month high versus dollar

* Supported by hopes for details from ECB on bond buying

* Aussie dlr hits lowest in nearly 6 weeks, awaits RBA

By Masayuki Kitano and Ian Chua

SINGAPORE/SYDNEY, Sept 4 (Reuters) - The euro rose against the dollar on Tuesday, nearing a two-month high hit last week, supported by hopes the European Central Bank will soon unveil details of a plan to tackle the region’s debt crisis.

The single currency rose 0.2 percent to $1.2615, hovering close to a high of $1.26378 seen last Friday on trading platform EBS, its strongest level since early July.

Traders said the paring back of bearish bets against the euro probably helped bolster the single currency, and there was also talk of euro buying by Asian players as well as euro buying against the yen by Japanese players.

Helping support the euro were expectations that the ECB will announce, after its policy meeting on Thursday, details of a long awaited debt-buying scheme to help ease funding pressures for stressed states.

Those hopes were given a boost on Monday after ECB President Mario Draghi was reported as saying purchases of sovereign bonds of up to three years maturity by the ECB did not constitute state aid.

With expectations running high ahead of Thursday’s ECB meeting, analysts said the euro could sag if there is any disappointment.

The euro’s downside against the dollar, however, could be limited in the near term, with the greenback likely to be weighed down by market speculation that the U.S. Federal Reserve might decide to launch another bond buying programme, or quantitative easing, as early as this month.

“I don’t see a big drop in euro/dollar from here, given the anticipation ahead of the Fed meeting,” said Mitul Kotecha, head of global foreign exchange strategy for Credit Agricole in Hong Kong.

Even if the ECB fails to live up to expectations and the euro were to come under pressure, its drop may be limited to levels just under the $1.25 level in the near term, he added.

The euro touched a two-month high against the Australian dollar at A$1.2325 and rose 0.4 percent against the yen to 98.88 yen.

Japanese importers were spotted buying the dollar against the yen, helping the dollar edge up 0.1 percent to 78.37 yen .

Investors continued to give the Australian dollar a cold shoulder after data the previous day showed an unexpected fall in domestic retail sales.

That added to the selling pressure against the Australian dollar, which has retreated over the past month on worries about a slowdown in China, Australia’s single biggest export market.

The Aussie fell to as low as $1.0224, its lowest level in nearly six weeks, before recovering a bit of ground. It last changed hands at $1.0239, down 0.1 percent on the day.

The Reserve Bank of Australia meets later in the day but is widely expected to keep interest rates unchanged. RBA Governor Glenn Stevens has repeatedly said the effects of past rate cuts are yet to be felt, suggesting he is in no hurry to act again.

“The AUD has underperformed in recent days as Chinese growth concerns have continued to dominate, but the currency could get a reprieve should today’s RBA statement come in as neutral as was seen at the last meeting,” said Kiran Kowshik, strategist at BNP Paribas.

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