FOREX-Dollar rises to one-month high versus euro

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Fri Apr 17, 2009 2:52pm BST

* Dollar hits one-month high versus euro

* Uncertainty over ECB policy weighs on euro

* Moody's puts Ireland's sovereign rating on review

* Swiss franc tumbles after SNB Roth's comments

(Updates prices, adds quotes, changes byline, changes dateline, previous LONDON)

By Wanfeng Zhou

NEW YORK, April 17 (Reuters) - The U.S. dollar jumped to a one-month high against the euro on Friday after a speech by the European Central Bank chief failed to dispel uncertainty about the bank's policy steps next month.

In a speech in Tokyo, ECB President Jean-Claude Trichet, who is due to unveil the bank's plans for unconventional policy steps to boost the economy next month, gave no details of these measures, saying he did not want to create expectations.

Analysts said the uncertainty over what the ECB is going to do next weighed on the single euro zone currency.

"They are sort of signaling that they want to head toward quantitative easing but nobody really knows exactly how they can get there. That's putting the euro under pressure," said Steven Butler, director of foreign exchange trading at Scotia Capital in Toronto. "There's just so much uncertainty right now. The euro is going to remain a bit vulnerable."

In early New York trading, the euro fell 1.1 percent to $1.3036 EUR=, after sliding to $1.3030, according to Reuters data, its weakest since March 18, when the U.S. Federal Reserve announced its plan to buy government bonds, a move than pushed the dollar sharply lower.

The dollar was slightly lower against the yen and last traded down 0.2 percent at 99.09 yen JPY= despite better than expected earnings results from Citigroup (C.N) and General Electric (GE.N).

The euro also dropped back below the 130 yen mark to trade down 1.3 percent on the day at 129.20 yen EURJPY=.

TRICHET COMMENTS

In the speech, Trichet said: "Any ambiguity in our medium-term policy direction would delay the return of sustainable prosperity."

The comments were seen by investors as a possible warning to ECB members who have recently expressed different views on the bank's next policy moves.

"The seeming disagreement among European monetary authorities along with relentlessly dour economic data emanating from the region has greatly undermined confidence in the European currency this week," Boris Schlossberg, director of currency research at GFT Forex, wrote in a research note.

Adding to pressure on the euro was a warning from ratings firm Moody's Investors Service that Ireland's 'AAA' rating may be cut to mid-to-high Aa range if it concludes that the country will emerge from the crisis with "relatively weak growth prospects and a much higher debt burden". See [ID:n4726].

Ireland has already lost its top-notch credit rating from the other two major ratings firms, Standard & Poor's and Fitch Ratings.

The Swiss franc fell sharply against the euro and dollar after Swiss National Bank Chairman Jean-Pierre Roth warned the central bank was ready to intervene should the Swiss franc strengthen.

"All I can say is that we acted decisively on the market and we will act decisively on the market again should a similar situation arise, (i.e.) a tendency of the franc strengthening against the euro," Roth said. For more, see [n4326]

The dollar last traded up 1.7 percent to 1.1666 francs CHF=, after hitting a session peak of 1.1688 francs, according to Reuters data. (Additional reporting by Tamawa Desai; Editing by Walker Simon)

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