FOREX-Aussie rise sparks broad dollar fall to 14-mth lows

Dlr hits 14-mth low vs AUD, 15-mth low vs CAD, NZD, CHF

* Aussie boosted by RBA Stevens' hawkish comments

* Stronger inflation data pushes kiwi higher

* Euro climbs to 14-month peak vs dollar

By Satomi Noguchi

TOKYO, Oct 15 (Reuters) - The dollar fell to a 14-month low against a basket of currencies on Thursday as comments by the head of Australia's central bank encouraged investors to buy the higher-yielding Australian dollar, which helped other currencies gain.

The Reserve Bank of Australia chief said local interest rates would need to move towards a more normal setting as economic recovery took hold, reinforcing the view that the country is heading for a second straight rate hike in November. [ID:nSYD397384]

The Aussie pushed higher to a 14-month peak against the dollar above $0.92, sparking a broad dollar slide that sent the Canadian dollar to a 15-month high and the euro to its highest levels since August 2008.

The New Zealand dollar jumped to a 15-month high versus the U.S. dollar after stronger-than-expected inflation numbers raised expectations of a near-term interest rate hike. [ID:nSYD485255]

"The dollar's slide comes in good market conditions with stocks rising. So there is no fear involved," said Kosuke Hanao, head of treasury product sales at HSBC in Tokyo.

Asian shares tracked Wall Street higher, adding to investors' appetite for riskier assets. Strong quarterly earnings from JPMorgan Chase (JPM.N) helped push the Dow Jones industrial average .DJI above 10,000 for the first time in a year.

The greenback was also under pressure after the minutes of the latest Federal Open Market Committee meeting suggested that U.S. interest rates are likely to remain low for some time. [ID:nWEQ003473]

The prospect of low U.S. interest rates would encourage investors to sell the dollar for other higher-yielding currencies in carry trades, especially if other central banks start lifting interest rates as their growth picks up.

"The weak dollar trend is continuing and we are getting more news that would feed into that momentum," said Tsutomu Soma, A senior manager of foreign securities at Okasan Securities

"The FOMC's minutes indicated that U.S. interest rates were unlikely to rise for a while, while Australia is saying positive things about its rates. So-called carry trades using the dollar or the yen are becoming apparent."

Traders said investors have been increasingly buying the Aussie after the Australian central bank became the first in the Group of 20 to raise interest rates last week as the global financial crisis eases.