(Corrects paragraph 4 sterling high to $1.4250 from $1.4259)
* Graphic: World FX rates tmsnrt.rs/2RBWI5E
By Kevin Buckland and Tom Westbrook
TOKYO/SINGAPORE, June 1 (Reuters) - Sterling hit a
three-year high and the dollar traded under pressure on Tuesday,
as investors waited for the next batch of U.S. and European data
to shape the outlook on interest rates.
Central bankers on both sides of the Atlantic have
repeatedly said recent price pressures are likely to be
transitory, and not prompt pre-emptive policy tightening, but
investors are wary of a strong recovery forcing their hand.
A shift in tone in Britain has helped sterling scale
February"s peak on Tuesday in the wake of remarks last week from
Bank of England policymaker Gertjan Vlieghe pointing to rates
rising late next year or sooner if the economy strengthens.
The pound was the best-performing G10 currency last
month and it rose as high as $1.4250 in the Asia session, its
strongest since April 2018.
The Australian dollar was the other major mover, and it
added as much as 0.5% as Australia"s current account surplus hit
a record high and drove upward revisions to economists" growth
forecasts.
Some of those gains were pared and the Aussie traded at
$0.7745 after the Reserve Bank of Australia made no changes to
policy settings and stuck with a dovish tone.
The yen edged marginally higher for a second
consecutive session, while other majors were mostly steady.
China"s yuan took a breather after posting its best month since
last November, and was flat at 6.3705 per dollar.
Traders in London and New York return from market holidays
on Tuesday.
"The dollar bias remains negative on the immediate horizon,"
analysts at Singapore"s OCBC Bank said in a note on Tuesday.
"The inability to impute Fed tapering or rate hike expectations
continue to weigh."
Some clues may come from European inflation data and a U.S.
manufacturing survey due later on Tuesday and from U.S. labour
data due on Friday. Federal Reserve Vice Chair Randal Quarles
and Governor Lael Brainard will also both be speaking at
separate events on Tuesday.
Commonwealth Bank of Australia strategist Joseph Capurso
says that trimmed measures of inflation, which eliminate the
most extreme price changes, show the U.S. has no inflation
problem, and markets will need to unwind some of the expectation
for near-term policy tightening, which will weigh on the dollar.
The global pandemic recovery will provide an additional
headwind, he said.
"The world economy is clearly recovering, and that is going
to be bad for the U.S. dollar because it’s a counter-cyclical
currency," Capurso said. "The U.S. dollar has been pretty heavy
in the last few weeks, and I think it keeps trending lower."
That includes a drop to $1.24 per euro by the end
of this month, extending to $1.32 by the middle of next year.
The euro was steady at $1.2224 on Tuesday, not far from a
nearly five-month high of $1.2266 touched last week. The U.S.
dollar index held at 89.817.
Crypto currencies were broadly steady, with bitcoin
last just below $37,000.
========================================================
Currency bid prices at 459 GMT
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar $1.2223 $1.2225 -0.01% +0.05% +1.2236 +1.2222
Dollar/Yen 109.5050 109.4600 +0.02% +5.99% +109.5600 +109.3900
Euro/Yen
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