* Dollar index briefly touches an eight-week high
* Upbeat U.S. data helps lift dollar sentiment
* BOJ Governor speech a focus in Asia
By Ian Chua
SYDNEY, May 28 The U.S. dollar held near an
eight-week peak against a basket of major currencies early on
Wednesday, having edged up on the back of encouraging U.S. data
and another record high on Wall Street.
The dollar index rose as far as 80.470 - a level last
seen in early April - but has since retreated to 80.350.
Dollar bulls took heart after data showed orders for
long-lasting U.S. manufactured goods unexpectedly rose in April
and consumer confidence perked up in May.
However, a lack of conviction resulted in the dollar ending
trade in New York with either slim gains or none at all against
its major peers.
The euro last traded at $1.3635, having recovered
from a three-month low of $1.3612 plumbed overnight. Both the
dollar and the euro clung to modest gains against the yen at
102.01 and 139.07, respectively.
Comments from European Central Bank (ECB) President Mario
Draghi again highlighted the bank's discomfort over persistently
low inflation and suggested some kind of policy action was
likely at the June 5 meeting.
At the final day of the ECB Forum in Portugal, Draghi said
the ECB was aware of the risks from prices remaining too low for
too long and the ECB was equipped to get inflation back to its
At the same forum earlier in the week, he said the bank must
be "particularly watchful" for any negative price spiral in the
The euro has already fallen more than 2 percent against the
dollar since Draghi said on May 8 that the ECB was ready to act
at the June meeting if updated inflation forecasts merit it.
Traders said further downside for the euro will depend on
how aggressively the ECB acts to tackle the threat of deflation.
In the meantime, there is a risk of a short-covering bounce
in the euro going into next week's policy review, analysts at
BNP Paribas wrote in a note to clients.
"But our positioning analysis suggests markets have not yet
become overly short euro, and we suspect longer-term investors
with large euro exposures may be only beginning to consider
hedging away their euro risk," they said.
The Australian dollar outperformed the greenback overnight,
briefly touching a one-week high of $0.9278 as it
continued to gradually recover from this month's steep fall from
above 94 U.S. cents.
Given an absence of major economic data out of Asia, the
focus will be on a speech by Bank of Japan (BOJ) Governor
Haruhiko Kuroda in Tokyo.
The BOJ has stood pat on policy since launching an
aggressive quantitative easing programme last April, and Kuroda
has repeatedly expressed confidence that the current policy
setting is helping the Japanese economy make steady progress
toward meeting the BOJ's inflation target of 2 percent.
(Reporting by Ian Chua; Editing by Jan Paschal)