* Dollar index slips back from 4-month highs
* Fed leaves rates unchanged as expected
* Central bank still on track to raise rates in June (Updates prices, adds comments)
By Masayuki Kitano
SINGAPORE, May 3 (Reuters) - The dollar traded below a four-month high against a basket of currencies on Thursday, with the focus shifting to economic data after the Federal Reserve did little to alter market expectations for further interest rate rises this year.
On Wednesday, the Fed left its benchmark overnight lending rate in a target range of between 1.50 percent and 1.75 percent as had been widely expected.
Its rate-setting committee said inflation had “moved close” to its target and that “on a 12-month basis is expected to run near the Committee’s symmetric 2 percent objective over the medium term.”
Analysts said the use of the word “symmetric” suggests that the Fed may allow inflation to run above its 2 percent target, a stance that would limit the need for the central bank to embark on a more aggressive path of monetary tightening in response to recent rises in inflation.
“The Fed is signalling it is keeping to the gradual path and not hiking rates at faster pace (at least for now),” Alvin Liew, senior economist for UOB in Singapore, said in a note.
After the Fed’s policy statement, traders of U.S. short-term interest-rate futures on Wednesday kept bets the Fed will raise interest rates at least two more times this year.
On Wednesday, the dollar’s index against a basket of six major currencies had briefly 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 — marking a 4 percent gain from a trough touched in mid-April.
In Asian trade on Thursday, the dollar index stood at 92.508 , having slipped back from that four-month high.
With the Fed’s meeting out of the way, focus is shifting to U.S. jobs data due on Friday for further indications of the strength of the economy and inflation pressures.
The euro rose 0.3 percent to $1.1985, getting some respite after setting a near four-month low of $1.1938 on Wednesday.
A near-term focus for the common currency is euro zone inflation data due later on Thursday, said Mitul Kotecha, senior EM strategist for TD Securities in Singapore.
The euro could come under pressure if the data shows a slowdown in core inflation in the euro zone, Kotecha said, adding that the dollar could see further gains, at least in the near term.
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 dollar eased 0.2 percent to 109.65 yen, inching away from a three-month peak of 110.05 yen set on Wednesday.
The pace of the dollar’s rise versus the yen has slowed somewhat, in the wake of the hefty gains seen since April, said Tareck Horchani, head of sales trading in Asia-Pacific for Saxo Markets in Singapore.
“The market is also probably pretty long (dollar/yen) now,” Horchani said, adding that the dollar could face some downside risk against the yen, if U.S. equities come under pressure on Thursday.
Asian shares slipped as hopes waned for real progress in Sino-U.S. trade talks, which are due to kick off on Thursday. (Reporting by Masayuki Kitano Editing by Eric Meijer and Sam Holmes)