* Dollar hits 6-week high vs yen, later pares gains
* Fed downplays weak Q1 economic growth in policy statement
* Aussie dollar touches lowest in nearly 4 months
(Updates prices, adds analyst comments)
By Masayuki Kitano
SINGAPORE, May 4 The dollar hit a six-week high
against the yen on Thursday, after the U.S. Federal Reserve
downplayed weak first-quarter economic growth and was seen as
leaving the door open to raising interest rates in June.
The Fed kept interest rates unchanged on Wednesday while
emphasising the strength of the labour market - a sign it was
still on track for two more rate rises this year.
The central bank said consumer spending continued to be
solid, business investment had firmed, and inflation has been
"running close" to its target.
The dollar rose to 112.89 yen earlier on Thursday, its
strongest level in more than six weeks. It later pared those
gains and last traded at 112.76 yen, little changed from
late U.S. trade on Wednesday.
The U.S. currency benefited as the Fed kept the door "wide
open" to a June rate hike, said Mitul Kotecha, head of Asia
macro strategy for Barclays in Singapore.
"The risk was that they could have perhaps sounded a little
bit more dovish on the back of the recent data and that
certainly wasn't the case," he added.
Private reports released on Wednesday supported the notion
that the U.S. economic expansion remains on track despite a weak
first quarter. U.S. companies hired workers at a slower but
still-solid pace in April while the services sector grew more
than expected, the reports showed.
The euro edged up 0.1 percent to $1.0895, regaining a
bit of ground after falling 0.4 percent on Wednesday.
The euro has lost some steam after scaling a 5-1/2 month
high of $1.0951 last week, when it rallied on relief over
centrist Emmanuel Macron's victory against anti-euro nationalist
Marine Le Pen in the first round of France's presidential
elections. The runoff vote is on May 7.
An opinion poll showed that Macron was found more convincing
than Le Pen in Wednesday's televised debate, reinforcing his
status as favourite to win the second round of the election on
"I think markets have largely already priced in a Macron
win," said Kotecha at Barclays, adding that the latest poll
result was unlikely to have much of an impact on the euro.
Investors are awaiting Friday's monthly U.S. non-farm
payrolls report, for further hints on the Fed's likely rate hike
trajectory through the end of the year.
"There's been some dollar-buying globally," said Satoshi
Okagawa senior global markets analyst at Sumitomo Mitsui Banking
Corporation, referring to the market reaction after the Fed
However, there is still uncertainty as to whether the
economy is really on track for the Fed to raise interest rates
twice more this year and to begin reducing its balance sheet,
either in late 2017 or next year, Okagawa added.
The Australian dollar touched its lowest level in nearly
four months at $0.7407. It was last trading at $0.7423,
little changed on the day.
The Australian dollar is down about 0.9 percent so far this
week, largely due to a shakeout in Aussie long positions.
(Reporting by Masayuki Kitano in Singapore, additional
reporting by Cecile Lefort in Sydney; Editing by Eric Meijer &