* Dollar index nurses losses, but off lows
* Fed recommits to aggressive stimulus programme
* ECB next in focus, then U.S. jobs on Friday
By Ian Chua
SYDNEY, May 2 The dollar remained on the
defensive in early Asian trade on Thursday but was off its lows
after the Federal Reserve recommitted to its aggressive stimulus
programme and kept its options open to what it would do next.
The dollar was last down 0.1 percent against a currency
basket, having earlier plumbed a fresh two-month low. The dollar
index eased 0.1 percent to 81.630 after sliding as
far as 81.331.
The greenback had been under pressure in the lead up to the
Fed meeting after tame inflation data and disappointing
employment growth added pressure on the Fed to expand its debt
The Fed said: "The Committee is prepared to increase or
reduce the pace of its purchases to maintain appropriate policy
accommodation as the outlook for the labour market or inflation
That disappointed some in the market looking for a clear
indication of bigger debt purchases, driving U.S. Treasury
yields up from four-month lows and helping the dollar trim broad
Yet with U.S. data turning soft, analysts said the Fed is
more likely to respond by increasing its debt purchases rather
than taper off.
Indeed, analysts at Barclays Capital said the addition of
the statement, especially the dependence on inflation outlook
given recent trends, is "incrementally dovish" and suggested
that real yields have room to fall.
The market's focus will now turn to the closely watched
non-farm payrolls report due on Friday. Foreshadowing a soft
reading, private sector hiring slowed again in April while
employment in the manufacturing sector fell.
Against the yen, the dollar was little changed at 97.31
, staying not far from a four-year high near 100 set in
Later Thursday the Bank of Japan will publish minutes of its
April 4 meeting, when new Governor Haruhiko Kuroda stunned
markets by promising to inject about $1.4 trillion into the
economy to hit the 2 percent inflation target in roughly two
The euro retreated to $1.3177, from a two-month high
of $1.3243 as the greenback pared losses.
The euro's immediate fortunes depend on the European Central
Bank (ECB), which is widely expected to deliver a token 25 basis
point rate cut to its 0.75 percent benchmark refinancing rate.
Anything less than a rate cut could see the euro stage a
rebound, traders said.
After a muted reaction on Wednesday to data showing China's
manufacturing activity cooled further in April, commodity
currencies like the Australian dollar came under heavy pressure
in New York. China is Australia's single biggest export market.
The Aussie dollar, which fell more than 0.8 percent on
Wednesday, last stood at $1.0271, pulling well away
from this week's peak of $1.0386.
HSBC will release its final survey of China's factory
activity for April at 0145 GMT. Earlier reports have raised
fresh doubts about the strength of the world's second biggest
economy after a disappointing first quarter.