FOREX-Dollar falls as focus shifts to recovery prospects

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Dollar falling as other economies enter recovery
* U.S. protests unnerve some investors
* Euro in focus before ECB

By Stanley White
TOKYO, June 3 (Reuters) - The dollar fell against most Asian
currencies on Wednesday as prospects of more government stimulus
and a global economic recovery emboldened investors to step up
holdings of riskier assets.
The Australian dollar hit a five-month high against the
dollar, as funds headed toward economies that are seen to be
recovering the fastest from the coronavirus pandemic.
The Aussie, which has benefited from signs its economic
downturn may be less severe than initially feared, could get an
additional boost if first quarter gross domestic product data
due later on Wednesday shows the country dodged a contraction.
China's yuan is also in focus before the release of services
sector data from the world's second-largest economy, which could
bolster expectations for economic recovery.
The greenback also fell against the British pound and nursed
losses against the safe-haven Swiss franc as investors pondered
mass protests against racism spreading across the United States.
"The U.S. dollar is generally weak," said Yukio Ishizuki, FX
strategist at Daiwa Securities in Tokyo.
"The Australian dollar has a lot of room to run because
there are still a lot of shorts that need to be covered. The
economy recovery story is the main factor."
The Australian dollar AUD=D3 rose early in Asian trading
to $0.6930, the highest since Jan. 7.
Across the Tasman Sea, the New Zealand dollar NZD=D3
jumped to $0.6391, the highest since March 9.
The greenback also slumped to a one-month low of $1.2584
against the British pound GBP=D3 .
The Aussie continued to draw buyers after the Reserve Bank
of Australia on Tuesday focused on the prospects for a speedy
recovery from the coronavirus shock. Australia's GDP data is unlikely to capture the full impact
of coronavirus lockdowns had on the economy, but traders say
sentiment for the Aussie has turned bullish because lockdown
restrictions are easing and due to rising commodity prices.
Traders will also monitor the yuan's opening in onshore
trade CNY=CFXS and the release of China's services PMI for
May.
The coronavirus first emerged in China late last year, but
it is also the first major economy to ease severe lockdown
restrictions, meaning it is likely to recover earlier than other
countries.
The greenback's fortunes against other safe-haven currencies
were mixed.
The dollar bought 0.9619 Swiss franc CHF=D3 , close to a
two-month low.
However, the U.S. currency briefly rose to a two-month high
of 108.40 yen JPY=EBS , threatening to break out of its recent
trading range.
U.S. President Donald Trump has threatened to use the
military to quell spreading protests against racism and police
brutality, but U.S. stocks continue to rally, leaving some
currency traders groping for direction. The euro EUR=D3 bought $1.1180 on Wednesday in Asia, close
to the highest since March 16, on hopes policymakers will
support the euro zone's weakest economies.
The European Central Bank is expected to increase its 750
billion euro ($839.25 billion) bond-buying programme, the
Pandemic Emergency Purchase Programme, on Thursday, probably by
around 500 billion euros. The ECB scooped up all of Italy's new debt in April and May
but merely managed to keep borrowing costs for the indebted,
virus-stricken country from rising, data showed on Tuesday.
($1 = 0.8937 euros)