FOREX-Dollar bogged at 2-year low as Fed maintains dovish script

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, July 30 (Reuters) - The dollar was mired at a more
than two-year low on Thursday as the Federal Reserve repeated a
pledge to limit damage from the pandemic as surging new
coronavirus cases hamper the economy.
The Fed's policy statement released at the close of its
two-day meeting directly tied the economic recovery to an end
the coronavirus health crisis. "We think September and November meetings will be more
eventful, with the (Federal Open Market Committee) expected to
conclude its framework review in September and then amend its
forward guidance and possibly adjust its inflation-targeting
strategy," said Mike Swell, head of Global Fixed Income
Portfolio Management, Goldman Sachs Asset Management in New
York.
The dollar has been tumbling on expectations that the Fed
will continue its ultra loose monetary policy for years to come
and on speculation that it will allow inflation to run higher
than it has previously indicated before raising interest rates.
The dollar index =USD fell 0.52% on Wednesday and steadied
at around 93.275, its lowest in more than two years. The dollar
traded at 104.97 yen JPY= , having fallen to 4-1/2-month low of
104.77 hit in previous trade.
The greenback weakness supported the euro at $1.1792 EUR= .
The common currency had hit a two-year high of $1.1807 and is on
course to post its biggest monthly gain in 10 years, having
risen about 5% so far this month.
Sterling also held firm against the dollar at $1.2998
GBP=D4 , just below Wednesday's 4-1/2-month high of $1.3013.
The dollar's decline came as investors started to doubt the
conventional wisdom that U.S. economic growth and investment
returns from the U.S. currency would be higher than many other
countries.
The U.S. epidemic has intensified since June, with an
average of around 65,000 new cases detected each day, putting a
brake on the rebound in economic activity and dashing hopes of
V-shaped recovery.
A government report due out later in the day is expected to
show a record 34% drop in annualised economic output last
quarter.
Adding to investor alarm, U.S. congressional Republicans and
Democrats were struggling to reach a deal on stimulus and slid
toward letting a $600-per-week unemployment benefit lapse when
it expires this week. Elsewhere, the Turkish lira dropped to a 2-1/2-month low
against the dollar TRYTOM=D3 and a record low versus the euro
EURTRYD3=R , on rising concerns over depleted reserves and
local demand for dollars despite state efforts to stabilise
trading.