* Dollar index trades near 4-month highs
* U.S. dollar recovers from brief dip after Fed statement
* Fed leaves rates unchanged as expected
* Central bank still on track to raise rates in June
By Masayuki Kitano
SINGAPORE, May 3 (Reuters) - The dollar traded near a four-month high against a basket of currencies on Thursday, having recovered from a brief dip after the Federal Reserve kept interest rates steady and said inflation had “moved close” to its target.
The dollar’s index against a basket of six major peers last stood at 92.645. It had slipped to around 92.245 after the Fed’s policy statement but later regained its footing to set a four-month high of 92.834 on Wednesday.
The Fed left its benchmark overnight lending rate in a target range of between 1.50 percent and 1.75 percent.
Its rate-setting committee said inflation had “moved close” to its target and downplayed a recent slowdown in economic and job growth, saying activity had been expanding at a moderate rate and job gains, on average, had been strong in recent months.
“The dollar had a slight wobble on the Fed’s latest statement...which was interpreted as dovish on the surface. But below lurked a confident sounding board,” Stephen Innes, head of trading in Asia-Pacific for Oanda in Singapore, said in a note.
The statement suggests that the Fed is confident that inflation remains on track to meet its target, he added.
“With the U.S. economic data flow continuing to dwarf other economies around the world and mainly the EU, the dollar remains the market’s darling for the time being,” Innes said.
The dollar has been buoyed in recent weeks by the strong U.S. economic outlook and rising yields amid signs of a slowdown in some other developed economies, especially in Europe.
The euro stood at $1.1964, up 0.1 percent from late U.S. trade on Wednesday. The common currency had set a low of $1.1938 on Wednesday, its weakest level since Jan. 11.
The dollar eased 0.1 percent to 109.75 yen, still not very far from a three-month high of 110.05 yen set on Wednesday.
Investors are focused on U.S. jobs data for April due on Friday for further indications of the strength of the economy and inflation pressures.
U.S. private-sector employers hired 204,000 workers in April, the smallest monthly increase since November, the ADP National Employment Report released on Wednesday showed. (Reporting by Masayuki Kitano Editing by Eric Meijer)