* Dollar, Aussie lifted by global rally in equities
* Loonie, kiwi in focus before Canadian, NZ c.bank meetings
* Markets focus on how dovish the c.banks may sound
(Adds details, quotes)
By Shinichi Saoshiro
TOKYO, Sept 9 (Reuters) - The dollar gained against the
safe-haven yen on Wednesday, boosted by a surge in global stocks
amid a recovery in risk appetite that also drove rallies in
commodity currencies such as the Australian and Canadian
dollars.
The dollar was up 0.4 percent at 120.29 yen JPY= ,
extending gains from an overnight low of 118.885, with a spike
in U.S. debt yields on reduced risk aversion helping the
greenback.
The U.S. currency followed a now established pattern of
moving with the ebb and flow in risk appetite, which tends to
favour the safe-haven yen and to a lesser degree the
low-yielding euro when assets such as equities are widely sold.
It was the dollar's turn to advance as European and U.S.
stocks surged overnight, and then Japanese and Chinese equities
rallied.
"I don't see an end to risk sentiment driving currencies any
time soon," said Shusuke Yamada, chief Japan FX strategist at
Bank of America Merrill Lynch (NYSE:BAC) in Tokyo. "It all goes back to
China, where opaqueness remains over its currency market,
monetary policy and capital controls. The forex market is most
on edge about a further possible devaluation of the yuan."
"Until China's stance in these areas is clarified,
currencies will retain their correlation with broader risk
sentiment," he said.
China sent shock waves by devaluing the yuan last month,
which deepened concerns about its slowdown and the global
economy, sending equities tumbling world-wide. But so far,
there's scant evidence that volatility in China has hurt its
domestic economy or the global one.
The Australian dollar touched a one-week high of $0.7071
AUD=D4 , gaining more than 2 percent over the past two days.
The rally whisked the Aussie away from a 6-1/2-year low of
$0.6892 struck on Monday.
"Equity movements continue to impact the dollar and yen, but
they won't be taking centre stage today. Instead, the Canadian
and New Zealand dollars, which are likely to move more ahead of
their central bank policy decisions, will gather much of the
attention," said Masafumi Yamamoto, senior strategist at Monex
in Tokyo.
The Bank of Canada is widely expected to keep interest rates
unchanged at 0.5 percent in light of recently upbeat data after
already cutting twice this year, although market participants
are readying for possibly dovish undertones from the central
bank. The decision is due at 1400 GMT.
The Reserve Bank of New Zealand (RBNZ), on the other hand,
is expected to cut interest rates to 2.75 percent on Thursday.
The focus is now on the language accompanying the policy
decision.
"The forecasts and language will probably imply one further
OCR (official cash rate) cut," wrote Sean Callow, a senior
currency strategist at Westpac in Sydney. He said his bank
"remains on the dovish side of consensus in terms of how low the
OCR is eventually cut".
The Canadian dollar nudged up 0.2 percent to C$1.3181
against the greenback CAD=D4 after gaining 0.8 percent
overnight as crude oil, a major export for Canada, surged on the
back of a global equities rally. A tumble in crude oil prices
had sent the loonie to an 11-year low of $1.3353 last month.
The New Zealand dollar was up 0.7 percent at $0.6389
NZD=D4 , after gaining more than 1 percent overnight. The kiwi
slid to 6-year low of $0.6200 late in August.
The euro dipped 0.2 percent to $1.1177 EUR= , stuck in a
narrow $1.1230-$1.1122 range this week.