FOREX-USD subdued as growth-linked currencies advance

TOKYO, Sept 17 (Reuters) - The dollar stayed on the defensive on Thursday as investors added to long positions in growth-linked currencies and lifted the Australian dollar to a one-year peak, encouraged by growing evidence of a global recovery.
Asian stocks tracked Wall Street higher after U.S. industrial production rose more than expected in August [ID:nN16118540] boosting sentiment towards riskier assets.
The sustained shift away from the U.S. dollar left the dollar index =USD subdued at 76.292, near 1-year lows of 76.151 struck on Wednesday and with charts pointing to a gradual fall to 2008 levels of around 70.70.
"Firm stocks suggest the dollar is probably set to slide for another week," said Hideaki Inoue, chief manager of forex trading at Mitsubishi UFJ Trust Bank.
The Australian dollar AUD=D4 rose to a one-year peak of $0.8756, up 0.2 percent on the day, with its next targets seen at $0.8813 and then $0.8907.
The New Zealand dollar NZD=D4, which advanced nearly 1.4 percent on Wednesday, was holding firm at $0.7140 with little resistance seen until $0.7200.
The euro EUR= held above $1.47 having struck a one-year high of $1.4738 on trading platform EBS on Wednesday.
The euro has now gained over 2.5 percent this month, riding on improved investor confidence and expectations that U.S. rates are likely to stay rock bottom for some time to come.
But the recent rally in the euro could run out of steam.
"With eight of the nine last sessions ending in euro rallies, the upward trend is extremely stretched," said Matthew Strauss, senior currency strategist at RBC Capital.
"In fact, euro valuations against the U.S. dollar are the most extreme since May this year. The trend is your friend but beware the technical correction."
The yen was broadly lower with the euro gaining 0.3 percent to 134.22 yen EURJP=R and the Aussie climbing 0.6 percent to 79.75 yen AUDJPY=R.
The U.S. dollar also rose 0.2 percent to 91.10 yen JPY= as some traders covered their short positions after it fell as far as 90.12 yen on EBS the previous day, a 7-month low.
On Wednesday, the dollar's slide against the yen picked up pace after Japan's Finance Minister Hirohisa Fujii said a strong yen had advantages for the nation's economy.
Fujii also said he was opposed to currency intervention if movements were gradual, while adding that currency moves were not rapid.
The yen's rise against the dollar on Wednesday was small despite Fujii's clear opposition to intervention, prompting traders to think twice about buying the yen at the moment, some traders said.
"Fujii was so clear about not intervening and he went so far as to say a strong yen has merit. But the dollar's slide against the yen ended up so small," said a senior trader for a Japanese bank.
"That suggests to me there is a background that the yen is missing its own fundamental reasons to be bought."
The yen showed little reaction to the Reuters Tankan manufacturing survey which found manufacturers were growing less pessimistic in September. [nTKC003469]
Also in Japan, the central bank ends its two day policy meeting on Thursday and is expected to keep rates unchanged at 0.1 percent although it could sound a bit more upbeat on the economy.
Data releases pick up later in the day with retail sales for August due in the UK while in the U.S., weekly jobless claims, home starts and the Philadelphia Fed business activity index are scheduled. (Additional reporting by Anirban Nag; Editing by Joseph Radford)