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* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee and Thyagaraju Adinarayan
LONDON, April 29 (Reuters) - The dollar held shy of two-week
lows against its rivals on Wednesday, with high-yielding
currencies leading gainers as investors bet on central bank
easing to remain even as partial lifting of coronavirus
lockdowns grew.
Against a basket of its rivals =USD , the greenback edged
down 0.2% to 99.73 in late morning London trade, above a
two-week low of 99.43 hit in the previous session.
Currency markets were largely in wait-and-watch mode with
limited moves before the outcome of a U.S. Federal Reserve
meeting later in the day, where policymakers are seen keeping
their promise to do whatever it takes to support the world's
largest economy. Before that, the U.S. quarterly GDP numbers will be released
at 1230 GMT, with consensus forecasts for a contraction of
around 4%. Analysts are already focusing on the extent of
recovery in coming months with a Reuters poll expecting the U.s.
economy to expand 3.8% in 2021. The dollar has weakened more than 3.5% after scaling a more
than three-year peak of 102.99 in late March as global central
banks launched massive stimulus measures to protect economies
from the novel coronavirus pandemic.
"Policy response from the Fed has been very aggressive,"
said Lee Hardman, currency analyst at MUFG. He expects the Fed
to continue to keep the money taps on to reduce the risk in
financial markets.
The unprecedented response by central banks has calmed
nerves in forex markets with the Deutsche Bank index of currency
volatility .DBCVIX sharply retreating from its highs in March.
"Investors are also encouraged by the plans of easing
lockdown measures in France and Spain and other European
countries and it does look like we will see a pick up in
activity towards the end of the second quarter," Hardman said.
The euro EUR=EBS climbed 0.3% to $1.08545 before a
European Central Bank meeting on Thursday.
The currency was hardly hit by Fitch's downgrade of Italy's
sovereign rating to one notch above junk as investors took
comfort from some economies in the bloc re-opening.
U.S. stock futures ESc1 meanwhile rose 0.7% while European
bourses were mixed.
"The weakening of the dollar and the strengthening of the
commodity-linked currencies suggest that risk appetite may have
remained supported for another day," said Charalambos Pissouros,
a senior market analyst at JFD Group.
The Australian dollar AUD=D3 led gains against the
greenback with the currency up 0.4% at $0.65200.
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