FOREX-Dollar recoups lost ground on talk of SNB buying

(Recasts, adds details, fresh quotes)

* Speculation of SNB buying puts bid under dollar

* Dovish Fed minutes had hurt dollar

* Greece requests extension of loan agreement

By Anirban Nag

LONDON, Feb 19 (Reuters) – The dollar recovered on Thursday, on talk the Swiss National Bank was buying the greenback, helping it recoup losses made after minutes from the Federal Reserve policy meeting showed an interest rate hike was some distance away.

The euro gave up most of its earlier gains, edging down to trade at $ 1.13905. It got little support from news that Greece had formally requested a six-month extension to its euro zone loan agreement as it raced to avoid running out of money within weeks.

The dollar rose against the yen, gaining 0.1 percent to trade at 118.95 yen. But most of its gains were against the Swiss franc, against which it rose 0.6 percent to 0.9481 francs.

All of which helped the dollar index trade flat at 94.221 , recovering from a low of 93.835 struck earlier.

“We have been hearing talk the SNB has been pushing the dollar/Swiss franc higher. Traders are just scared to take them on,” said a spot currency trader.

Earlier, the dollar had fallen broadly after minutes showed that the Fed was concerned about turmoil in markets across the globe. It was the first time since January 2013 that the Fed made an overt reference to overseas economic events in its policy statement.

“The minutes were a bit on the dovish side compared to what the market was looking for, so we saw the dollar coming under some initial pressure as a result of that, but I don’t think that changes the bigger picture,” said Ian Stannard, head of European FX strategy at Morgan Stanley in London.

“While the Fed has the potential to generate some short-term volatility, we think the growth picture is the important thing and that is why we still believe we’re in a dollar bullish environment.”

The euro gained 0.5 percent against the Swiss franc , rising to 1.0800 francs, its highest level since the Swiss National Bank removed the 1.20 francs per euro cap on Jan 15. Against the yen, the euro was up 0.1 percent at 135.50 yen .

“We see the euro topping at around $ 1.15 against the dollar,” said Geoff Yu, currency strategist at UBS. “We retain our one-month forecast of $ 1.13.”

Traders said the terms of Greece’s agreement were crucial for the euro to push higher in the short term. In a document seen by Reuters, Greece appeared to have moved substantially toward the position taken by euro zone finance ministers in negotiations on Monday that ended without a deal.

As a result, Greek bond yields retreated further from highs hit last week as the standoff between Greece’s anti-austerity government and its EU/IMF lenders over a new debt deal rattled investors.

(Editing by Crispian Balmer and Susan Fenton)