FOREX-Dollar flies high as euro struggles on ECB easing expectations

* Dollar index hits 13-month highs, breaks above Sept 5 peak

* Upbeat U.S. data in contrast to dour euro zone outlook

* Euro struggles as markets see more ECB easing

By Ian Chua

SYDNEY, Aug 27 (Reuters) - The dollar hovered just under a 13-month peak against a basket of major currencies early on Wednesday, with the euro still struggling amid expectations of further policy easing from the European Central Bank.

The dollar index rose as far as 82.698 after finally breaking above its Sept. 5 peak of 82.671. It was last at 80.670.

Data on Tuesday showed orders for U.S.-manufactured durable goods posted their biggest gain on record in July, while consumer confidence rose in August to its highest level since October 2007.

The eye-catching U.S. data, albeit driven by a huge jump in aircraft orders, only served to bolster long dollar/short euro positions - a trade embraced in earnest after recent dovish comments from the head of the European Central Bank.

Since Mario Draghi rekindled prospects of more stimulus as early as next week, the common currency has fallen nearly 1 percent. It slid to $1.3164 overnight, bringing into play the Sept. 6 trough of $1.3104. The euro last traded at $1.3168.

"We now expect the ECB to take some further policy steps at next week's meeting," analysts at JPMorgan wrote in a note to clients.

"While we still do not expect the ECB to actually deliver a sovereign QE programme, we think that the likelihood has increased substantially and that things could move very quickly."

Investors, however, turned slightly cautious on the euro/Swiss franc as it neared the 1.20 per euro mark, a barrier the Swiss National Bank has vowed to protect. The euro edged up to 1.2080 francs, from a near two-year low of 1.2072.

The greenback was less impressive versus many other currencies after its recent run higher. Against the yen, it firmed a touch to 104.10, but held under Monday's 7-month peak of 104.49.

The Australian dollar managed to drift back up above 93 U.S. cents, while the Canadian dollar bounced off a four-month trough of C$1.0998 per USD to C$1.0956.

Aussie dollar bulls will be keeping a close eye on private-sector spending plans due out on Thursday. Ahead of that, second-tier construction data is due at 0130 GMT.

There is little in the way of market-moving data in Asia. In Europe, market research group GfK will release its forward-looking German consumer sentiment indicator.