* Dollar index steady, holds near a six-month peak
* U.S. Q2 GDP, Fed statement next in focus
(Updates prices, adds comments)
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, July 30 The dollar hovered
near a six-month high against a basket of currencies on
Wednesday as investors awaited a Federal Reserve policy decision
and U.S. gross domestic product data due later in the day.
Dollar bulls are holding out hope that U.S. second quarter
gross domestic product will show the economy has rebounded from
a very soft patch and that the Fed will provide some hints on
when it will raise interest rates.
The dollar index held steady on the day at 81.215. On
Tuesday, it had risen to 81.245, a high last seen in early
February. The dollar index is now back in the 81.000/81.482 band
that had capped it over the past nine months.
"The dollar managed to mark a number of notable, bullish
technical breaks versus its major counterparts despite the fact
that Wednesday's Q2 GDP release and FOMC rate decision are
likely to impact the greenback specifically - regardless of the
outcome," said John Kicklighter, chief currency strategist at
"Speculators' complacency and contentedness will be put to
The euro held steady at about $1.3408, stuck near a
fresh eight-month low of $1.3404 that had been set on Tuesday.
Worries about geopolitical tensions in Ukraine and concerns
that sanctions against Russia could have a negative economic
impact on Europe have helped weigh on the euro recently, said
Bart Wakabayashi, head of foreign exchange for State Street
Global markets in Tokyo.
"This is something that everyone has been saying for six
months or so now, but there has recently been some confirmation
of that," Wakabayashi said, adding that such issues were
unlikely to go away soon.
A survey released late last week had shown that German
business sentiment fell to its lowest level in nine months in
July, adding to signs that Europe's largest economy is slowing
and suggesting that firms are worried about the crises in
Ukraine, Iraq and Gaza.
On Tuesday, the European Union and the United States
announced further sanctions against Russia, targeting its
energy, banking and defence sectors in the strongest
international action yet over Moscow's support for rebels in
Against the yen, the dollar hovered near a three-week high
ahead of the Fed policy decision and U.S. GDP data.
The dollar was flat on the day at about 102.09 yen
after having risen to 102.16 yen on Tuesday, its highest level
since early July.
Analysts polled by Reuters expect the U.S. the economy to
have grown at an annualised rate of 3.0 percent in the second
quarter, turning around from a 2.9 percent contraction in the
first three months of the eyar due in part to a harsh winter.
Traders said anything less than 3 percent will be taken as a
negative and could send dollar bulls packing.
The Fed, meanwhile, is all but certain to cut its monthly
bond-buying programme by another $10 billion, but the focus has
already shifted to when it will start to lift interest rates.
This week's meeting, however, will conclude with only a
statement and none of the theatre associated with a news
conference, leaving markets to go through every sentence with a
fine-tooth comb for subtle changes.
(Editing by Eric Meijer & Kim Coghill)