FOREX-Dollar hits fresh lows as soft U.S. jobs data cements Fed stimulus hopes


* Dollar index touches fresh 8-month low

* Euro/dollar sets fresh 2-year high

* September job growth 148,000, below forecast of 180,000

* Aussie rises after CPI data dampens rate cut chances

By Hideyuki Sano and Masayuki Kitano

TOKYO/SINGAPORE, Oct 23 (Reuters) - The dollar set a freshtwo-year low against the euro on Wednesday after disappointingU.S. jobs data cemented expectations that the Federal Reservewill not begin to taper its stimulus until early next year.

The dollar also touched a fresh eight-month trough against abasket of currencies, with the dollar index slipping to 79.141 and nearing this year's low of 78.918 set in earlyFebruary.

The greenback came under pressure after data showed U.S.employers added far fewer workers than expected in September,suggesting the economy may have lost some momentum even before adamaging 16-day partial shutdown of the federal government thismonth.

"It's becoming difficult for the Federal Reserve to reduceits stimulus this year," said Shinichiro Kadota, currencystrategist at Barclays.

The euro edged up 0.1 percent to $1.3791. Earlier, itrose to as high as $1.3793 on trading platform EBS, just slightly exceeding Tuesday's peak to reach its highest levelsince November 2011.

Against the yen, the euro slipped 0.4 percent to 134.72 yen, after having touched a four-year high of 135.52 yenon Tuesday.

U.S. nonfarm payrolls increased by 148,000 workers lastmonth, below economists' median forecast of 180,000. While thejob count for August was raised, employment gains in July wererevised lower to the weakest level since June 2012.

A majority of U.S. primary dealers polled by Reuters nowbelieve the Federal Reserve will not start cutting its current$85 billion a month bond buying until March.

"I think there's certainly a high possibility that dollarweakness might extend a bit further, but I'm not really surethat it changes the medium-term dollar picture," said Sim MohSiong, FX strategist for Bank of Singapore.

In the near-term, the dollar could see further weaknessagainst other major currencies such as the euro and sterling,Sim said, adding that the euro may rise towards levels around$1.39.

One near-term focal point is the Fed's Oct. 29-30 policymeeting, which could provide clarity on whether there has beenany substantial change to Fed policymakers' views on theeconomy, Sim added.

The dollar sagged against the yen, even though risingexpectations of continued Fed stimulus tends to boost riskappetite and hurt the safe-haven yen.

The dollar slipped 0.5 percent to 97.69 yen, stuck ina familiar trading range between 97 and 100 in the past fewweeks.

"The latest market move confirms that the dollar/yen canrise only so much as long as there are expectations of a Fedstimulus," Osamu Takashima, chief currency strategist atCitigroup Securities in Tokyo, said in a report.

The Australian dollar scaled a 4-1/2 month high after ahigher-than-expected domestic inflation reading reduced thechances of further interest rate cuts from Australia's centralbank.

The Aussie rose to as high as $0.9758, its highest levelsince early June, and last stood at $0.9724, up 0.1percent on the day.

The Australian dollar, which has retraced half of itsApril-to-August fall, is testing resistance from its 200-daymoving average that now lies at $0.9749.

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