FOREX-Dollar edges up; New Zealand and Aussie dollars gain

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Updates prices, adds comment and chart)
By Elizabeth Howcroft
LONDON, June 8 (Reuters) - The dollar edged up from recent
two-and-a-half-month lows on Monday while the New Zealand dollar
strengthened to its highest in nearly four months after New
Zealand said it had stopped transmission of the coronavirus
within the country.
New Zealand Prime Minister Jacinda Arden said on Monday that
it would lift all virus-containment measures apart from border
controls, making it one of the first countries to do so.
The New Zealand dollar rose against the U.S. dollar in early
London trading, hitting a high of 0.6540, its strongest since
Jan. 29 NZD=D3 . The Australian dollar also rose, close to
five-month highs at 0.6979 AUD=D3 .
But hopes for an economic recovery were less clear
elsewhere. Better-than-expected U.S. employment data raised
expectations for a quicker global economic revival on Friday,
but in Europe on Monday the rally in stocks paused as investors
turned cautious again. German industrial output plunged the most on record in April
as the coronavirus pandemic forced companies in Europe's largest
economy to scale back production. The euro was flat, having slipped from recent highs, at
$1.1286 EUR=EBS . It reached a three-month high of $1.1384 last
week after the European Central Bank announced that it was
expanding its stimulus programme. "EUR/USD may be due some consolidation after a very strong
rally, but we suspect the 1.1230/40 area offers good support now
before EUR/USD advances to the 1.15/16 area," ING strategists
wrote in a note to clients.
ECB President Christine Lagarde will speak at the European
Parliament at 1345 GMT.
Investors are now waiting for more information about a
European Union recovery fund proposed last month - a 750
billion-euro plan to prop up European economies hammered by the
coronavirus pandemic. Euro long bets continued to rise in the week to June 2, with
81,240 in net long contracts, according to weekly futures data.
At 1000 GMT, the dollar index was at 96.88, having gained
overnight, fallen in early London trading, then started gaining
again from around 0720 GMT =USD .
"The Fed's strong commitment to maintain loose policy helped
to dampen the US dollar's positive reaction to the stronger NFP
report," Lee Hardman, currency analyst at MUFG, wrote in a note
to clients.
But Hardman added that his models signalled there was a risk
of the dollar correcting higher, temporarily, after having been
heavily oversold.
The dollar lost out to the safe-haven Japanese yen, which
rose to 109.43 at 1000 GMT JPY=EBS . This was a reversal of
recent downward pressure on the yen, which fell against the
dollar every day last week as risk appetite improved.
The U.S. Federal Reserve policymakers meet this week. They
will need to balance signs that the economic fallout from the
virus is past its worst with the evidence that the virus itself
is not yet under control. "It is way too soon for the Fed to seriously consider
reining in their aggressive policy easing in response to the
economic recovery," wrote MUFG's Hardman.
Major oil producers agreed to extend a deal on output cuts
to the end of July as China's crude imports hit an all-time high
in May. The Norwegian crown held close to three-month highs
against the dollar and euro NOK=D3 EURNOK=D3 as oil prices
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Euro https://tmsnrt.rs/2UilwmA
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