* U.S. Q2 GDP seen up 1.0 percent
* Fed meeting in focus as ECB, BoE also meet this week
* Aussie falls on RBA comment, weak GDP dents Swedish crown
By Gertrude Chavez-Dreyfuss
NEW YORK, July 30 The dollar fell to a nearly
six-week low against the euro on Tuesday as investors positioned
for a soft second-quarter U.S. economic growth report, which
would reinforce expectations the Federal Reserve would keep
interest rates low for an extended period.
Analysts were expecting gross domestic product in the United
States due on Wednesday to have expanded by 1 percent in the
second quarter, down from a 1.8 percent rise in the first,
according to a Reuters poll. That should persuade the Fed, which
starts its two-day meeting on Tuesday, to keep monetary easing
These are all dollar-negative scenarios.
"The market seems to be positioning for a lower GDP number
and for the Fed to keep its monetary easing in place, causing
weakness in the dollar," said Brian Kim, currency strategist, at
RBS Securities in Stamford, Connecticut.
Fed Chairman Ben Bernanke ha indicated in May that the U.S.
central bank may start phasing out its bond-buying program in
September, which fueled a dollar rally, but he backpedaled a few
weeks ago, saying quantitative easing will stay as long as the
economy remains weak and inflation low.
A reduction in the Fed's stimulus is positive for the
greenback because that could push U.S. interest rates higher,
making the dollar attractive to investors.
In early New York trading, the euro was up 0.2
percent at $1.3289 after hitting $1.3301, the highest since June
19. Europe's common currency was also helped by surveys showing
improved euro zone economic confidence.
The euro's gains could be short-lived, with the European
Central Bank meeting on Thursday and is likely to keep monetary
policy loose as well.
The Bank of England also meets on Thursday, and is likewise
expected to retain its easy monetary bias.
Analysts at Barclays recommended reinitiating short
euro/dollar positions, with a target of $1.28 and stops at
Against the yen, the dollar was little changed at 97.98 yen
It erased earlier losses after data showed U.S. house
prices rose in May.
The dollar was flat against a basket of currencies at 81.646
, above Monday's five-week low of 81.499 and chart support
at 81.524, the 200-day moving average.
"The broader dollar strengthening trend remains very much
alive," Barclays analysts said, adding that firmer U.S. data,
including monthly jobs figures on Friday, could lead to a
But traders expected any dollar gains to be limited for now.
"The market is looking to get through the FOMC, month-end
and (U.S.) non-farm payrolls before a look back towards buying
the dollar again," a London-based trader said.
AUSSIE, SWEDISH CROWN FALL
The Australian dollar fell to a two-week low of
US$0.9050, just above a near three-year trough of US$0.8998 hit
in mid-July, after Reserve Bank of Australia Governor Glenn
Stevens said the currency could fall further and there was room
for more interest rate cuts. It was last at
US$0.9091, down 1.2 percent.
The Swedish crown also lost more than 1 percent against the
euro after data showed the Swedish economy unexpectedly
contracted during the second quarter. The euro
hit a two-week high around 8.6958 crowns. It was
last up 1.1 percent at 8.6824.