* Dollar softer after Fed gives no stimulus exit details
* Dollar/yen manages to stay above important Ichimoku
* ECB, BoE meetings expected to keep forward guidance on
* Aussie plumbs 3-year lows
By Ian Chua and Hideyuki Sano
SYDNEY/TOKYO, Aug 1 The U.S. dollar wallowed
near six-week lows against a basket of major currencies on
Thursday after the Federal Reserve gave no fresh hints that it
was preparing to scale back stimulus at its next meeting in
The Fed said it would keep buying $85 billion in mortgage
and Treasury securities per month and noted the potential
dangers of inflation running too low, while calling the pace of
economic growth "modest" rather than "moderate," as it had
consistently for most of the past year.
"The Fed seems to have downgraded their overall economic
assessment, thus capping the dollar," said Minori Uchida, chief
currency analyst at the Bank of Tokyo-Mitsubishi UFJ.
The dollar index, which tracks the greenback's performance
against a basket of major currencies, last stood at 81.777
, slightly above late U.S. levels but still not far from a
low of 81.407 touched on Wednesday.
But many economists still expect the Fed to begin slowing
its asset-buying programme as early as next month, especially in
light of data showing U.S. economic growth was not quite as weak
as expected in the second quarter.
"The Fed sounded a bit more dovish on the economy... just
enough to keep the dollar from going too far on the back of
stronger data. In fact, you saw yields in the U.S. go lower
overnight. That leaves us still waiting for other major central
banks," said Greg Gibbs, senior strategist at RBS in Singapore.
Traders also say a strong reading in Friday's U.S.
employment data could cement expectations of a reduction in the
Fed's stimulus in September.
Against the yen, the dollar managed to hold above important
support from Ichimoku cloud bottom near 97.50.
It got a further boost after China's official manufacturing
data showed a small improvement, boosting Asian shares.
The dollar last traded at 98.27 yen, up 0.4 percent
from late U.S. levels, off Wednesday's five-week low of 97.585.
TALKING DOWN THE EURO?
As the dollar sagged, the euro reached a six-week high
around $1.3345, but the common currency later eased back
to $1.3276 with investors wary of getting too carried away ahead
of policy meetings at the European Central Bank and Bank of
England later on Thursday.
The ECB is expected to hold off on further stimulus but is
seen standing by last month's forward guidance, expecting rates
to stay at 0.5 percent or lower for an "extended period".
"When the euro has risen, ECB Governor (Mario) Draghi often
tries to rein it in. I suspect a euro around $1.33 would be a
burden for euro zone countries other than Germany. So he may try
to talk down the euro a bit," said Mitsubishi Bank's Uchida.
The big mover was the Australian dollar, which skidded
towards 89 U.S. cents in thin trade, reaching its lowest in
The Aussie fell as far as $0.8910 on Wednesday and
was on track to end the week down more than 3 percent.
Although the currency drew some comfort from the Chinese
manufacturing data, it remained vulnerable at $0.8949, flat on
the day, with the next major level seen at the August 2010
trough of $0.8770.
Traders said stops were triggered below 88.00 yen
, which took the Aussie to 87.42 yen, it lowest level
this year. That sell-off weighed heavily on the commodity
The Aussie was already having a bad week following dovish
comments from Reserve Bank of Australia (RBA) Governor Glenn
Stevens on Tuesday, which led the market to not only price in a
cut in rates next week, but a second easing before year-end.
"The Aussie is clearly on its knees, in particular we think
Stevens gave the green light for the currency to go lower," said
Su-Lin Ong, senior economist at RBC in Sydney.
"When you get that and generally disappointing Chinese data,
the U.S. continuing to point towards a pick up in the economy,
it's a whole confluence of factors that keeps downward pressure
on the currency."