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
TOKYO/SINGAPORE, Oct 23 (Reuters) - The dollar set a fresh two-year low against the euro on Wednesday after disappointing U.S. jobs data cemented expectations that the Federal Reserve will not begin to taper its stimulus until early next year.
The dollar also touched a fresh eight-month trough against a basket of currencies, with the dollar index slipping to 79.141 and nearing this year's low of 78.918 set in early February.
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 a damaging 16-day partial shutdown of the federal government this month.
"It's becoming difficult for the Federal Reserve to reduce its stimulus this year," said Shinichiro Kadota, currency strategist at Barclays.
The euro edged up 0.1 percent to $1.3791. Earlier, it rose to as high as $1.3793 on trading platform EBS, just slightly exceeding Tuesday's peak to reach its highest level since 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 yen on Tuesday.
U.S. nonfarm payrolls increased by 148,000 workers last month, below economists' median forecast of 180,000. While the job count for August was raised, employment gains in July were revised lower to the weakest level since June 2012.
A majority of U.S. primary dealers polled by Reuters now believe 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 dollar weakness might extend a bit further, but I'm not really sure that it changes the medium-term dollar picture," said Sim Moh Siong, FX strategist for Bank of Singapore.
In the near-term, the dollar could see further weakness against 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 policy meeting, which could provide clarity on whether there has been any substantial change to Fed policymakers' views on the economy, Sim added.
The dollar sagged against the yen, even though rising expectations of continued Fed stimulus tends to boost risk appetite and hurt the safe-haven yen.
The dollar slipped 0.5 percent to 97.69 yen, stuck in a familiar trading range between 97 and 100 in the past few weeks.
"The latest market move confirms that the dollar/yen can rise only so much as long as there are expectations of a Fed stimulus," Osamu Takashima, chief currency strategist at Citigroup Securities in Tokyo, said in a report.
The Australian dollar scaled a 4-1/2 month high after a higher-than-expected domestic inflation reading reduced the chances of further interest rate cuts from Australia's central bank.
The Aussie rose to as high as $0.9758, its highest level since early June, and last stood at $0.9724, up 0.1 percent on the day.
The Australian dollar, which has retraced half of its April-to-August fall, is testing resistance from its 200-day moving average that now lies at $0.9749.