FOREX-Dollar slumps to 1-yr lows before Fed, kiwi jumps

* Dollar index hits 1-yr low below the 76 mark

* NZD surges on growth surprise, buoys other majors vs USD

* Wave of stop losses triggered in dlr/yen

* Markets awaits Fed statement later in the day

By Rika Otsuka

TOKYO, Sept 23 (Reuters) - The ailing dollar fell to a one-year low against a basket of currencies on Wednesday as speculators dumped the low-yielding greenback ahead of a Federal Reserve policy announcement later in the day.

The New Zealand dollar surged to its highest in 13 months against the U.S. currency after the economy unexpected pulled out of recession in the second quarter, fueling expectations the central bank might have to start raising rates sooner than previously thought.

The kiwi NZD=D4 smashed through all barriers to rise over a cent to $0.7315, its highest since early August 2008, after gross domestic product (GDP) data showed the economy unexpectedly grew in the second quarter, ending a prolonged recession. [ID:nWEL462955]

The jump in the kiwi prompted investors to shift more money into other higher-yielding currencies such as the Australian dollar from the U.S. dollar, and helped trigger further speculative dollar selling against other currencies such as the euro and the yen.

"Dollar selling quickly spread to a wide-range of currencies as the dollar resumed its slide the previous day," said Tohro Sasaki, chief FX strategist for Japan at JP Morgan Chase Bank.

"The dollar is vulnerable at the moment as it is around key levels against many currencies, hovering in areas where lots of loss-cut selling orders await," Sasaki said.

The dollar index .DXY, which measures the dollar's value against a basket of six major currencies, was down 0.2 percent at 75.945, having fallen to a one-year low of 75.915. Charts indicate the next support level at around 74.70.

The index has shed over 2.5 percent this month as speculators sold the dollar on rising confidence in a global recovery and expectations that rates will stay at rock-bottom levels there.

Those expectations are likely to get a boost when the Fed ends its two-day policy meeting later in the day. Expectations are growing that the Fed will reiterate its intention to keep a super-accommodative policy for an extended period.

The euro EUR= rose past resistance around $1.4825 to a one-year high of $1.4843 on trading platform EBS before slipping back to $1.4817, up 0.2 percent on the day.

The dollar fell below 90.50 yen at one point before crawling back to 90.75 yen, down 0.4 percent from late U.S. trade. Dealers said stop-losses were triggered around the 90.90 yen level, making the drop even sharper

Posted in: Business-Economic,World News