* Dollar hits year-to-date high vs euro at $1.1702
* Kiwi sent on round trip after RBNZ holds but projects
hikes
* Fed July minutes eyed at 1800 GMT
By Tom Westbrook
SINGAPORE, Aug 18 (Reuters) - The dollar hit a nine-month
high against the euro and held broad gains elsewhere on
Wednesday as investors have cut exposure to riskier currencies,
mostly on virus concerns, while the kiwi was sent on a loop when
central bank held fire on rate hikes.
The euro touched $1.1702 early in the Asia
session, its lowest since November 2020, before recovering
slightly to $1.1718.
The kiwi, heavily sold on Tuesday, fell further to
also make a nine-month trough at $0.6868 after the Reserve Bank
of New Zealand held off on raising rates amid a snap lockdown in
the country over seven COVID-19 cases. However it soon
recovered, climbing to $0.6933 because hikes were still on the
horizon.
Sterling and the commodity-exposed Australian and Canadian
dollars all hovered near recent lows against the dollar as the
market mood remained cautious. The dollar index held at
93.068, just below the one-week high it hit on Tuesday.
"The dollar is being supported by the nervous risk
environment," said Moh Siong Sim, currency analyst at Bank of
Singpore.
"Markets are paying attention to the Delta variant and the
area which is of most concern seems to be China," he said.
"There"s a stock market that"s taken a bit of a beating
recently, there"s regulatory risk and now there are COVID
outbreaks in China - does this all add up to say that we should
be paying a lot more attention to downside risks in China?"
China"s markets have been roiled by a wide front of reform
and regulation and on Tuesday China moved to further tighten
control of its tech sector, publishing detailed rules aimed at
tackling unfair competition and data security.
At the same time, the highly-contagious Delta variant has
found a foothold in formerly COVID-free New Zealand.
New Zealand"s central bank left interest rates unchanged at
a record low of 0.25% owing to uncertainty around the outbreak,
which the health chief thinks could run to 50 or 100 cases.
Markets are now pricing a 60% chance of a hike in October.
"The Reserve Bank was ready to pull the trigger, COVID comes
along 24 hours earlier and so they"ve just pulled back on that,"
said Jason Wong, senior market strategist at BNZ in Wellington.
"It depends on COVID now...if this lockdown"s short, then
rate hikes are on the table, but there"s always going to be a
half chance it continues longer and the market"s not willing to
price a hike."
Elsewhere, the risk-averse mood that had knocked sterling
to a three-week low on the dollar on Tuesday persisted
and held the British currency near that level at $1.3754.
The Japanese yen eased on the dollar overnight, but rose
against other currencies and touched a 5-1/2-month high of
128.21 per euro in the Asia session. It last traded at
109.55 per dollar.
The commodity-exposed Canadian dollar recovered
slightly from an overnight one-month low.
The trade-exposed South Korean won bounced from an
11-month low it touched on Tuesday after a government official
said he was closely watching out for a possible overshoot in
exchange-rate movements as foreigners sell stocks.
Later on Wednesday traders are looking to minutes from the
Federal Reserve"s July meeting for clues around the timing or
speed of plans to taper asset purchases. They are due at 1800
GMT.
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Currency bid prices at 0313 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar $1.1721 $1.1708 +0.12% -4.06% +1.1724 +1.1701
Dollar/Yen 109.5650 109.5300 -0.01% +6.03% +109.6100 +109.5000
Euro/Yen
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