* Fed Chairman Powell sounds positive on U.S. economy
* Dollar holds overnight gains
* Safety buying, BoJ steadiness lifts yen
* Aussie sold after soft data spurs easing expectations
By Tom Westbrook
SINGAPORE, Sept 19 (Reuters) - The dollar found broad
support on Thursday after the U.S. Federal Reserve cut interest
rates, as expected, but offered mixed signals about future
easing, while weak employment figures hit the Australian
currency.
The greenback gained against major currencies except for the
Japanese yen JPY= , which posted its sharpest daily rise in
almost a month on some safe-haven buying. The Bank of Japan also
met expectations by holding off on deeper monetary
easing. "There's such a lack of certainty on a number of fronts,"
said Nick Twidale, co-founder of Sydney-based trade finance
provider Xchainge, citing dollar liquidity tightness and the
gloomy outlook for global growth.
"I think we will see more dovish central banks still."
The biggest loser on that front was the Australian dollar
AUD=D3 , which had its worst day in a month as expectations for
more central bank rate cuts leapt after joblessness hit a
one-year high. The Reserve Bank of Australia has been focusing on the
labour market for clues as to whether another round of easing is
necessary. The Aussie dropped 0.6% to a two-week low of $0.6782 on the
greenback and fell by a percentage point on the yen.
"With the economy growing at the slowest annual growth rate
in a decade and jobs being lost in the construction sector...it
appears that additional policy stimulus will be required," said
Ryan Felsman, a senior economist at the Commonwealth Bank of
Australia, which now expects a rate cut next month.
The New Zealand dollar NZD=D3 briefly jumped 0.2% after
June-quarter gross domestic product landed higher than
expectations, before being swamped by a rising greenback and
expectations of monetary easing in New Zealand. The dollar was steady against the euro EUR= , standing at
$1.1034, and flat against the British pound GBP= , at $1.2469,
after overnight gains.
The yen's 0.5% gain to 107.77 per dollar, after touching a
seven-week low overnight, was its biggest daily rise since Aug.
The moves came after the U.S. central bank, on a 7-3 vote,
said it had lowered the Fed funds target rate on Wednesday to a
range of 1.75% to 2.00% "in light of the implications of global
developments for the economic outlook."
However, Fed Chairman Jerome Powell described U.S. prospects
as "favourable" and the rate move as "insurance." He did not
rule out future cuts, but his remarks were not as dovish as
markets had hoped for which lifted bond yields and the dollar.
Projections published by the Fed showed policymakers
expected rates to stay within the new range through 2020, while
futures markets have priced in at least another cut.
"In the short term, this hawkish cut should still see the
dollar well-bid, given that the path of interest rates outlined
by the Fed is not close to that priced into the markets," said
John Veils, Americas FX and macro strategist at BNY Mellon.
"The USD is still the highest-yielding currency in the G10
world, a sign that it is also the least unattractive house in an
increasingly blighted neighbourhood."
Editing by Jacqueline Wong and Sam Holmes)