* Dollar near lows after sinking on Fed decision
* Aussie pauses after fresh 28-year high, euro 10-mth peak
* ECB, BoE meeting outcomes next in focus
By Masayuki Kitano and Charlotte Cooper
TOKYO, Nov 4 (Reuters) - The dollar held near recent lows
against the euro and Australian dollar on Thursday after dropping
following a Federal Reserve decision to buy more government debt,
and it edged back down towards a 1995 record low on the yen.
The market concluded that the Fed's decision to buy $600
billion more in Treasuries by the middle of next year was
ultimately in line with expectations, spelling more dollar supply
that would be likely to weigh it down further.[]
The Fed's commitment to open-ended purchases of Treasuries,
implying low funding costs for a while, also plays into carry
trades, in which the dollar is used to fund purchases into
commodities, emerging markets and higher-yielding currencies.
As as result, the dollar remained close to a 28-year low hit
against the higher-yielding Australian dollar after the Fed
decision and not far off a 10-month trough against the euro at
$1.4200.
The dollar index <=USD>, a gauge of its performance against a
basket of currencies, eased 0.1 percent to 76.31, just above its
2010 low set in October at 76.144 and trendline support at 76.10.
"We're still seeing buyers of Asian currencies as well so the
continued dollar weakness story still holds," said Robert Reilly,
co-Head of flow fixed income and currencies at Societe Generale
CIB in Hong Kong.
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Asian share markets rose on Thursday and metal prices
rallied, while gold futures jumped more than 1 percent.
The Australian dollar, whose central bank raised rates by 25
basis points to 4.75 percent this week, hit a post-float high
above $1.0060 <AUD=D4> after the Fed decision before pulling back
to $1.0059 on Thursday.
The dollar fell 0.3 percent against the yen, which
strengthened on the crosses after falling on the Fed decision,
and it eased back below 81.00 yen per dollar <JPY=>, taking it
within range of its 1995 postwar record low of 79.75 yen.
A trader said it was falling on selling by Japanese banks,
possibly reflecting orders from Japanese exporters.
For dollar/yen, the key issue would be to see how far the
Fed's bond purchases actually pushed down U.S. yields.
"If they push down U.S. yields in the belly of the curve then
it could create downward pressure on the dollar/yen," said
Masafumi Yamamoto, chief FX strategist Japan at Barclays.
Medium-term Treasury yields fell after the Fed decision on
the view they would benefit most from the bond purchase
programme, while 30-year yields jumped in a sharp steepening of
the curve.
Still, traders remain on alert for possible yen-selling
intervention by Japanese authorities to weaken the yen.
The Bank of Japan meets on Nov. 4-5, having brought
forward its policy review from mid-November to speed up the
launch of its 5 trillion yen ($62 billion) asset buying scheme.
Analysts had said the timing of the meeting gave the BOJ the
chance to act quickly if the Fed surprised the market and
triggered a new wave of dollar selling.
Koji Fukaya, chief currency strategist at Credit Suisse
Securities in Tokyo, expected the Bank of Japan to stand pat on
Friday, however.
He said the dollar could see a correctional bounce ahead of
the year-end due to the potential for short-dollar position
unwinding, and was likely to trade in a range between 80 yen to
82 yen as it found support towards the year-end.
The euro, which hit 10-month highs at $1.4200 after the Fed
decision, was unchanged from late U.S. trade at $1.4139 <EUR=>.
Chartwise, it is seen as having scope to rise to $1.4375, a
76.4 percent retracement of its fall from above $1.5140 late last
year to its June low of $1.1876.
The European Central Bank meets on Thursday. The ECB is not
expected to show any signs of veering off its crisis exit path,
but there is an outside chance of more quantitative easing by the
Bank of England. [] []
Sterling hit a peak at $1.6180 <GBP=D4> on Wednesday, a high
last seen in late January, before easing back to $1.6126.
"We may be in for a period of consolidation. We've got the
ECB and Bank of England meetings tonight, so we'll see how
those pan out. In the more medium term, for the dollar to
regain a stronger tone you'll need to see the jobs data," said
Grant Turley, a strategist at ANZ in Sydney.
On Friday, the influential non-farm payrolls data is
expected to show the U.S. economy generated 60,000 jobs in
October. []
(Additional reporting by Hideyuki Sano in Tokyo and Ian Chua in
Sydney, and Reuters FX analyst Krishna Kumar in Sydney; Editing
by Michael Watson)
