* Euro hits 2-year peak of $1.3825, but may struggle to gain
* Dollar weak on steady Fed policy expectations, lower U.S.
* Chinese data briefly boosted Australian dollar
By Wanfeng Zhou
NEW YORK, Oct 24 The dollar fell to a two-year
low against the euro on Thursday on expectations the U.S.
Federal Reserve will continue its bond purchases well into next
The euro shrugged off disappointing data showing the pace of
growth in euro zone business unexpectedly eased this month. Talk
of heavy buying by central banks in Asia also boosted the common
A shutdown of the U.S. government earlier this month and
weaker-than-expected September jobs data fueled concerns about
the economy. A Reuters poll showed a majority of U.S. primary
dealers do not expect the Fed to start cutting stimulus until
March of next year.
"Regarding the U.S. dollar, we recently moved to a small
short position," said Vassilis Dagioglu, head of asset
allocation portfolio management at Mellon Capital in San
"The persistent bullish dollar theme, as a result of a
perceived Fed taper that has been present since May, now seems
to have diminished to a degree."
The euro rose 0.2 percent to $1.3803, having hit as
high as $1.3825, according to Reuters data, its strongest since
Markit's Flash Composite Purchasing Managers' Index (PMI)
fell to 51.5 from September's two-year high of 52.2, below all
forecasts in a Reuters poll that predicted an uptick to 52.5.
Some analysts said the euro may struggle to make a sustained
break above $1.38.
"The disappointing tone of the euro zone data will suggest
that the euro is looking toppy up here, and this should keep
euro/dollar in check," said Jane Foley, senior currency
strategist at Rabobank in London.
Against a basket of currencies, the dollar hit a near
nine-month low of 79.081 and was last down 0.1 percent at
In the United States, jobless claims fell less than expected
in the latest week to a seasonally adjusted 350,000. The data,
however, did not reflect the true picture because California
continued to process a backlog of applications caused by
A drop in the 10-year U.S. Treasury yield on
Wednesday to a three-month low further dented the dollar's
The dollar slipped 0.1 percent against the yen at 97.28 yen
but held above Wednesday's two-week low of 97.13 yen,
according to Reuters data.
The Australian dollar got a boost from data showing
Chinese manufacturing at a seven-month high in October. But it
later surrendered gains and last traded at $0.9614, down 0.1
Analysts said concerns remained about rising money market
rates in China, which may weigh on the Australian currency.
China's benchmark seven-day repo rate rose nearly a percentage
point on Thursday after China's central bank let cash flow out
of the money market for a second week.
"Those underlying concerns kept currencies with close ties
to China, like the Aussie and loonie (Canadian dollar), from
participating in the broader risk rally," said Joe Manimbo,
senior market analyst at Western Union Business Solutions in
The New Zealand dollar fell 0.5 percent to $0.8347,
while the Canadian dollar also slid with the greenback rising
0.4 percent to C$1.0423.