* Aussie gains after RBA holds steady as widely expected
* Dollar index edges away from seven-week lows
* Euro resilient, hits six-week highs despite low CPI
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, July 1 The dollar wallowed close
to seven-week lows against a basket of major currencies on
Tuesday, with the greenback pressured by doubts about the
strength of the U.S. economic recovery.
The Australian dollar, meanwhile, rose after a central bank
policy statement was less dovish than some market participants
had expected and stopped short of explicitly talking down the
The Reserve Bank of Australia kept its cash rate steady at a
record low of 2.5 percent as widely expected, after minutes of
its last policy meeting in June predicted subpar economic growth
for the whole year ahead.
"The market was probably expecting an accompanying statement
today tuned with dovish overtones, but the statement was less
dovish than the minutes conveyed," said Sue Trinh, senior
currency strategist at RBC Capital Markets in Hong Kong.
The Aussie last traded at $0.9455, up about 0.2
percent after rising as high as $0.9458, its highest since
mid-April. Resistance lies at its 2014 peak of $0.9461, Trinh
The Aussie was also bolstered by upbeat data from China, the
country's largest trading partner. China's official Purchasing
Managers' Index rose to 51 in June from May's 50.8, while a
separate private survey by HSBC also showed the PMI expanded for
the first time in six months.
The greenback retraced some overnight losses but remained
not far from recent lows. The dollar index edged slightly
up on the day to 79.834, pulling away from its Monday low of
79.759, which was its weakest level since May 9. The U.S. unit
fell 0.7 percent in June, on growing expectations that U.S.
interest rates will not be heading higher anytime soon.
San Francisco Fed President John Williams reinforced these
expectations on Monday, saying the U.S. central bank will
probably need to keep interest rates near zero for at least
another year, even as he expressed optimism the economy is on
the recovery path.
Against the yen, the dollar inched up on the day to 101.43
, but remained not far from Monday's six-week low of
Underpinning the yen, the Bank of Japan's "tankan" survey
showed major Japanese companies plan to increase spending more
than expected this year, adding to signs the country's economic
recovery will get back on track after an expected slip in the
Markets shrugged off optimistic U.S. data on Monday that
showed a jump in pending home sales to an eight-month high.
"It's been more of the same overnight with further U.S.
dollar weakness, with gains in the GBP, EUR, JPY, AUD, and the
NZD triggered more by momentum and market 'stops' than any
economy fundamental news," said David de Garis, economist at
National Australia Bank in Sydney.
The euro hit a six-week high just shy of $1.3700 on
Monday, and was treading water below that level at $1.3683.
Against the yen, the common currency rose fractionally to 138.77
as it continued to recover from last month's trough
of 137.70 yen.
The resilience of the common currency was at odds with data
on Monday showing euro zone inflation remained mired at levels
seen during the 2009 recession, and that lending to households
and firms slumped in May.
Euro zone inflation stayed at 0.5 percent in June, far below
the European Central Bank's medium-term target of just below 2
percent. Private sector loans fell 2.0 percent.
While the latest data will keep the pressure on the ECB to
ease further, the central bank is considered highly unlikely to
follow-up on last month's wide-ranging stimulus steps when it
holds its policy meeting on Thursday.
Instead, the bank is seen taking a wait-and-see approach
rather than launching an asset-buying program in the footsteps
of the Bank of Japan and Fed.
(Editing by Shri Navaratnam)