By Satomi Noguchi
TOKYO, May 1 (Reuters) - The dollar edged down against the
yen and the euro on Thursday, extending its broad slide the
previous session after the Federal Reserve trimmed interest rates
as expected but left the door open for more rate cuts.
Analysts said the Fed did not convincingly signal a pause in
its easing campaign that started in September, with the language
in its post-meeting statement balancing the need to both
forestall a recession and ease inflationary pressure.
The dollar turned vulnerable again after having rebounded
sharply from a record low against the euro, as market players
shifted their focus to Friday's U.S. employment data that is
expected to show more jobs were shed in April.
"A weak jobs report could revive market pessimism about the
U.S. economy and knock the dollar towards 100 yen again," said
Kazuyuki Takami, a senior manager of the currency trading group
at Bank of Tokyo-Mitsubishi UFJ.
But activity on Thursday was expected to stay thin as many
regional and European markets are closed for Labour Day holidays
and ahead of U.S. manufacturing data due before the jobs report.
The dollar dipped 0.2 percent to 103.70 yen <JPY=>, extending
its slide in quiet trade from a two-month high of 104.89 yen hit
on Wednesday before the Fed lowered interest rates to 2 percent.
The dollar had staged a big rebound from its 13-year low of
95.77 yen hit in mid-March as stability in financial markets
suggested to investors the worst of the credit crisis might be
over.
The U.S. central bank has cut 3.25 percentage points since
September to shield the U.S. economy from the credit market
turmoil.
The euro inched up 0.1 percent to $1.5635 <EUR=>, off a
one-month low of $1.5517 marked on Wednesday. Further easing by
the Fed would likely push the dollar towards a record low against
the euro, with key lending rates in the euro zone expected to
stay at 4 percent for a while, traders said.
The dollar hit an all-time low of $1.6020 per euro on
electronic trading platform EBS last week.
The Australian dollar dipped after soft building approvals
data for the country reaffirmed a view that domestic demand was
slowing and the central bank is likely to keep rates at 7.25
percent. The Aussie was down 0.3 percent at $0.9390 <AUD=>.
Gold jumped almost 2 percent and U.S. crude futures clawed
back towards a record high near $120 per barrel on a softer
dollar, regaining their appeal as alternative investments.
BACK TO JOBS
A U.S. report on Wednesday from ADP Employer Services showed
that private-sector employers added 10,000 jobs in April. While
that gain was much better than the 60,000 job cuts economists had
forecast, currency traders did not expect the upcoming jobs
report to paint a better picture.
"An upbeat result for Friday's U.S. jobs data is hard to see.
But that in turn means a better-than-expected number could
surprise the market," said Toshiki Sai, head of forex trading at
Royal Bank of Scotland in Tokyo, adding a break above 105 yen for
the dollar could open the gate to 107 yen.
Economists on average projected that the U.S. economy lost
80,000 jobs in April after losing the same amount a month
earlier.
On Thursday, investors will scrutinise the Institute for
Supply Management manufacturing index for April, which is expect
to show a reading of 48.0, slightly lower than the March reading
of 48.6.
(Additional reporting by Shinji Kitamura; Editing by Brent
Kininmont)
