* Dollar index holds firm, touches fresh six-month peak
* Euro touches fresh eight-month low vs dollar
* U.S. Q2 GDP, Fed statement next in focus
By Ian Chua and Masayuki Kitano
SYDNEY/SINGAPORE, July 30 The dollar touched a
six-month high against a basket of major currencies on
Wednesday, holding firm ahead of a Federal Reserve policy
decision and U.S. gross domestic product data due later in the
Dollar bulls are holding out hope that the U.S. economy has
rebounded in the second quarter from a very soft patch and that
the Fed will provide some hints on when it will raise interest
Against a basket of major currencies, the dollar touched a
high of 81.251 as of 0626 GMT, its strongest level in
about six months.
The euro remained wobbly and slipped to a fresh eight-month
low around $1.3403 on trading platform EBS, moving just a tad
below the previous day's trough. The euro last stood at $1.3405
, little changed on the day.
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
Moves among major currencies were subdued ahead of the Fed
policy decision and U.S. GDP data. Against the yen, the dollar
touched a fresh three-week high of 102.165 yen on EBS, and was
last steady on the day at 102.15 yen.
Analysts polled by Reuters expect the U.S. 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 year 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 Kim Coghill & Shri Navaratnam)