FOREX-Dollar down on chances for more Fed easing, anti-virus drug trial

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Central banks set theme for currencies
* Euro steady as traders eye ECB meeting
* Yuan rises to two-week high

By Stanley White
TOKYO, April 30 (Reuters) - The dollar fell on Thursday
after the U.S. Federal Reserve left the door open to more
monetary easing and dampened expectations for a quick economic
recovery from the coronavirus crisis.
The greenback also pulled back on signs the pandemic is
receding in other countries and on reduced safe-haven demand for
holding funds in dollars. Positive trial results for a drug to
treat COVID-19 also boosted the appetite for riskier
assets. The euro edged lower before a European Central Bank meeting
later on Thursday where policymakers are likely to expand debt
purchases to include junk bonds and take other steps to ease
conditions in credit markets.
China's currency hit a two-week high on hopes over the
potential virus treatment. Data also suggests the world's
second-largest economy is starting to slowly recover from the
coronavirus-driven dive in activity even though the path ahead
appeared bumpy.
More countries are taking steps to re-open their economies
as coronavirus infections slow, giving some cause for optimism.
However, it will likely take several months for U.S.
consumer spending to fully recover given the massive job losses,
which has discouraged any extensive dollar buying.
"The Fed has already eased a lot, but the fact that it said
it would be willing to do even more has taken some gloss off the
dollar," said Minori Uchida, head of global market research at
MUFG Bank in Tokyo.
"I expect dollar/yen to drift lower. The euro can benefit
from dollar weakness as long as euro-zone government bond
spreads don't widen a lot."
The dollar fell slightly to 106.50 yen JPY=EBS on
Thursday, close to a six-week low.
Against the pound GBP=D3 , the dollar stood at $1.2480,
following a 0.3% decline on Wednesday.
The greenback was little changed at 0.9744 Swiss franc
CHF=EBS .
After a two-day policy meeting ending Wednesday, the Fed
kept interest rates near zero and promised to expand emergency
programmes as needed to help the battered economy. Fed Chairman Jerome Powell offered no sanguine words about
how fast the country might recover from the near-record low
unemployment and slump in the economy as the pandemic hit the
United States.
Data released on Wednesday showed U.S. gross domestic
product contracted by 4.8% in the first quarter - the sharpest
slump since the 2007-2009 recession.
Economists say the second quarter could be even worse.
The United States and other major economies forced
businesses to close and kept people at home to slow the spread
of the novel coronavirus, which slammed the brakes on global
growth.
In the onshore market, the yuan CNY=CFXS rose to a
two-week high of 7.0534 per dollar partly supported by data
showing factory activity in China expanded, albeit at a slower
pace, for a second straight month in April. Chinese businesses are resuming work following the easing of
shutdowns related to the coronavirus, which first emerged in the
central Chinese province of Hubei late last year.
The euro EUR=EBS eased slightly to $1.0866 on Thursday.
Against the pound EURGBP= , the common currency fell 0.26% to
87.08 pence.
The ECB, which announces its policy decision later Thursday,
is under pressure to keep government bond yields from rising
after rating agency Fitch cut Italy's credit rating to one notch
above junk due to the financial burden of the coronavirus
outbreak.
The ECB is already printing money at a record rate to buy up
ballooning state debt. However, European Union officials have struggled to agree
the details of a joint recovery fund, which shifts the burden to
the ECB, analysts say.
The Australian dollar AUD=D3 rose to a seven-week high of
$0.6565 on Thursday in a sign of improving risk sentiment among
some investors.
The Aussie has also benefited from the country's success in
containing coronavirus infections.
The New Zealand dollar NZD=D3 also hit a six-week high as
economic activity returns following the end of one of the
world's strictest lockdowns related to the coronavirus.