SYDNEY The euro started Asian trade in familiar ranges on Thursday as key risk events including the Jackson Hole meeting of central bankers loomed, but investors continued to give commodity currencies a wide berth.
Traders are speculating the Federal Reserve will embark on more policy stimulus at its September 12-13 meeting with bets Fed Chairman Ben Bernanke would hint at further easing on Friday at a gathering of global central bankers in Jackson Hole, Wyoming.
The euro stood at $1.2531, having drifted a touch lower from Wednesday's high around $1.2574. It still remained near a seven-week peak of $1.2590 set a week ago.
The small pullback in the single currency saw the dollar index .DXY edge up slightly to 81.538. Against the yen, the greenback firmed a tad to 78.72, up from a low of 78.48.
Traders said a small upward revision to second quarter U.S. growth and the Fed Beige Book report showing the economy growing gradually in July and early August may have slightly dampened expectations for more Fed action.
Still, some analysts remained confident that Bernanke will signal some form of stimulus, including a third round of large-scale bond buying or quantitative easing (QE3).
"If QE3 is announced, we should expect the U.S. dollar to take a severe beating, especially against the euro and the yen. However, if any form of new QE is announced which doesn't suppress the yield curve, the U.S. dollar could actually gain," said Christopher Vecchio, currency analyst at DailyFX.
Investors are also pinning their hopes the European Central Bank will unveil concrete steps next week to tackle the region's debt crisis.
Bolstering those views, ECB President Mario Draghi wrote in an opinion piece on Wednesday that the ECB must employ "exceptional measures" at times to fulfill its mandate of delivering stable prices.
A Reuters poll revealed a strong expectation that Draghi will indeed launch a bond-buying plan to help reduce crippling Spanish and Italian borrowing costs.
Italy will test market appetite later in the day when it tries to sell up to 6.5 billion euros of five- and 10-year bonds.
Commodity currencies remained on the backfoot, having come under pressure in the past few sessions as investors grew increasingly worried about the outlook for China, a major export market for Australia and New Zealand.
Both Antipodean currencies continued their downward trend with the Aussie reaching a fresh one-month low of $1.0337. The kiwi slid to $0.8000, lows not seen since late July.
The New Zealand dollar was flirting with its 200-day moving average at $0.7996, while the Aussie was not far its 55-day moving average at $1.0333.
The immediate focus for the Aussie dollar is business spending data due at 0130 GMT. Forecasts center on another solid increase of 2.4 percent in the second quarter. Such an outcome could help temper worries about an end to the mining boom.
"After being stopped out of our discretionary long AUD/USD trade, we established a long AUD/USD trade, targeting $1.0545, based on the BNP STEER model. The model showed that the recent decline in AUD/USD is not justified by underlying fundamentals," analysts at BNP Paribas wrote in a note.
(Editing by Wayne Cole)