FOREX-Dollar stung by Fed minutes, Aussie rises on solid jobs data

Reuters

* Dollar plumbs fresh three-week lows

* Fed minutes taken as dovish, markets no longer see early 2015 rate hike

* Solid Australian jobs data lifts Aussie to peak above 94 U.S. cents (Updates prices, adds comments)

By Ian Chua and Masayuki Kitano

SYDNEY/SINGAPORE, April 10 (Reuters) - The dollar hit a three-week low versus a basket of major currencies on Thursday after minutes from the Federal Reserve's March meeting disappointed dollar bulls, while the Aussie dollar surged on data showing solid Australian jobs growth.

Minutes of the Fed's March 19 meeting released on Wednesday showed Fed officials had worried the bank's forecasts on interest rates might appear to investors as mapping out a more aggressive cycle of rate hikes.

Analysts at JPMorgan said the minutes were taken as dovish by markets, adding they "contained no record of a discussion as to how long it would take between the end of asset purchases and the beginning of rate hikes."

The greenback remained on the defensive in the wake of the Fed minutes.

The dollar index hit a three-week low of 79.430 earlier on Thursday, well below a seven-week high of 80.599 set last Friday. It last stood at 79.526, down about 1.1 percent for the week.

The dollar index has pretty much relinquished the gains made since the head of the U.S. central bank on March 19 suggested that interest rates may rise as soon as early next year.

On March 19, the Fed said it would wait a "considerable time" after ending its asset-buying program before lifting interest rates.

Asked what the Fed meant by "considerable time", Janet Yellen said: "It probably means something on the order of around six months". Her comments had sent the dollar surging that day as investors quickly priced in the chance of a hike early in 2015.

Now, that rally has been almost completely unwound as markets have pushed back the timing of the Fed hike out to later in 2015.

The euro held steady near $1.3849, but was up about 1 percent on the week and remained well above a low of $1.3672 plumbed on Friday.

Against the yen, the dollar slipped 0.2 percent to 101.82 yen, holding near a three-week low of 101.55 yen that had been set on Tuesday.

AUSSIE BREACHES RESISTANCE

Commodity currencies extended their gains as the dollar faltered.

The Australian dollar broke above tough chart resistance at 94 U.S. cents after data showed that Australian employment grew more than expected in March, reinforcing the view that Australia's central bank would keep interest rates on hold for a while, and hold off from cutting them further.

The Australian dollar rose to as high as $0.9440, its highest level since last November. It last fetched $0.9409, still up 0.2 percent on the day.

The Aussie dollar pared some of its gains following disappointing Chinese trade data, which did little to dispel concerns about slowing growth in the world's second-largest economy and Australia's biggest export market.

Still, the Australian dollar looks pretty firm, said Teppei Ino, Singapore-based analyst for Bank of Tokyo-Mitsubishi UFJ.

"While there are some short-term signs of being overbought, it is looking strong on charts," Ino said, adding that technical charts suggested that the Aussie dollar's bull run might continue.

The Aussie dollar's 14-day relative strength index (RSI) is now at around 81, well above the 70 threshold that suggests a currency may be overbought.

The New Zealand dollar touched a high of $0.8746, its strongest level in more than 2-1/2 years. It last fetched $0.8717, steady from late U.S. trade on Wednesday.

(Editing by Eric Meijer)

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