* Aussie gains after RBA holds steady as widely expected
* Dollar index edges away from seven-week lows
* Euro resilient, hits six-week highs despite low CPI
By Lisa Twaronite and Ian Chua
TOKYO/SYDNEY, July 1 (Reuters) - The dollar wallowed close to seven-week lows against a basket of major currencies on Tuesday, with the greenback pressured by doubts about the strength of the U.S. economic recovery.
The Australian dollar, meanwhile, rose after a central bank policy statement was less dovish than some market participants had expected and stopped short of explicitly talking down the currency.
The Reserve Bank of Australia kept its cash rate steady at a record low of 2.5 percent as widely expected, after minutes of its last policy meeting in June predicted subpar economic growth for the whole year ahead.
"The market was probably expecting an accompanying statement today tuned with dovish overtones, but the statement was less dovish than the minutes conveyed," said Sue Trinh, senior currency strategist at RBC Capital Markets in Hong Kong.
The Aussie last traded at $0.9455, up about 0.2 percent after rising as high as $0.9458, its highest since mid-April. Resistance lies at its 2014 peak of $0.9461, Trinh said.
The Aussie was also bolstered by upbeat data from China, the country's largest trading partner. China's official Purchasing Managers' Index rose to 51 in June from May's 50.8, while a separate private survey by HSBC also showed the PMI expanded for the first time in six months.
The greenback retraced some overnight losses but remained not far from recent lows. The dollar index edged slightly up on the day to 79.834, pulling away from its Monday low of 79.759, which was its weakest level since May 9. The U.S. unit fell 0.7 percent in June, on growing expectations that U.S. interest rates will not be heading higher anytime soon.
San Francisco Fed President John Williams reinforced these expectations on Monday, saying the U.S. central bank will probably need to keep interest rates near zero for at least another year, even as he expressed optimism the economy is on the recovery path.
Against the yen, the dollar inched up on the day to 101.43 , but remained not far from Monday's six-week low of 101.23 yen.
Underpinning the yen, the Bank of Japan's "tankan" survey showed major Japanese companies plan to increase spending more than expected this year, adding to signs the country's economic recovery will get back on track after an expected slip in the second quarter.
Markets shrugged off optimistic U.S. data on Monday that showed a jump in pending home sales to an eight-month high.
"It's been more of the same overnight with further U.S. dollar weakness, with gains in the GBP, EUR, JPY, AUD, and the NZD triggered more by momentum and market 'stops' than any economy fundamental news," said David de Garis, economist at National Australia Bank in Sydney.
The euro hit a six-week high just shy of $1.3700 on Monday, and was treading water below that level at $1.3683. Against the yen, the common currency rose fractionally to 138.77 as it continued to recover from last month's trough of 137.70 yen.
The resilience of the common currency was at odds with data on Monday showing euro zone inflation remained mired at levels seen during the 2009 recession, and that lending to households and firms slumped in May.
Euro zone inflation stayed at 0.5 percent in June, far below the European Central Bank's medium-term target of just below 2 percent. Private sector loans fell 2.0 percent.
While the latest data will keep the pressure on the ECB to ease further, the central bank is considered highly unlikely to follow-up on last month's wide-ranging stimulus steps when it holds its policy meeting on Thursday.
Instead, the bank is seen taking a wait-and-see approach rather than launching an asset-buying program in the footsteps of the Bank of Japan and Fed.
(Editing by Shri Navaratnam)
- Budget, Tax & Economy
- Reserve Bank of Australia