FOREX-Dollar loses safe-haven shine, sends euro to 11-week high

* Dollar index fell about 5% since mid-March
* Safe-haven Japanese yen trades weaker
* Australian dollar rises to highest since January
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Recasts, adds new comments and latest news and updates prices)
By Olga Cotaga
LONDON, June 2 (Reuters) - The euro reached an 11-week high
on Tuesday as the dollar lost ground, with investors maintaining
their hopes for a global economic recovery.
The optimism persisted within markets despite growing
concern over U.S.-China tensions and mass protests across the
United States over the death of a black man in police custody.
Traders remain hopeful that central banks will continue to
buy government bonds and other financial assets to protect their
economies from the coronavirus pandemic.
The European Central Bank, for instance, is expected to
increase its 750 billion-euro Pandemic Emergency Purchase
Programme, or PEPP, on Thursday, probably by around 500 billion
euros. The Bank of Japan, ECB and the Federal Reserve have
increased their balance sheets by 10%, 20% and 70% respectively
since the start of this year, said Kit Juckes, macro strategist
at Societe Generale.
The euro last fetched $1.1178, up 0.4% on the day EUR=EBS ,
after rallying to $1.1185, its highest since March 17.
The U.S. dollar fell to a three-month low of 1.3503 against
the Canadian dollar and was last trading down 0.4% CAD=D3 . It
also fell against the Australian dollar AUD=D4 , which rose to
$0.6852, its highest since Jan. 24.
The safe-haven Japanese yen fell 0.1% versus the dollar to
109.71 JPY=EBS .
"The strengthening of the commodity-linked currencies and
the weakening of the safe havens suggest that investors'
appetite remained supported for another day," said Charalambos
Pissouros, senior market analyst at broker JFD Group.
"It seems that investors continued placing bets on the
prospect of a global economic recovery as governments around the
globe continue to ease their lockdown measures," Pissouros said.
The U.S. dollar index against a basket of six major
currencies =USD fell to its weakest since mid-March, at 97.44,
before settling in neutral territory at 97.82.
The index has fallen about 5% from a peak hit in March, when
panic over the COVID-19 pandemic gripped the world's financial
markets, prompting investors to scramble for the safety of
dollars.
George Saravelos, a currency strategist at Deutsche Bank,
said he expects the dollar to weaken about 10% in narrow
trade-weighted terms to fully take out the risk premium, adding
that so far the currency has fallen 3%. He sees euro/dollar
rising to $1.15.
Market risk sentiment was hurt only slightly on Monday when
Bloomberg reported China had told state-owned companies to halt
purchases of soybeans and pork from the United States, raising
concern that the trade deal between the world's two biggest
economies could be in jeopardy. Later, it emerged that state-owned Chinese companies bought
at least three cargoes of U.S. soybeans on Monday, even as
sources in China said the government had told them to halt
purchases. Optimism has so far also survived the rising social unrest
in the United States, where President Donald Trump vowed to
deploy the military to halt violence if mayors and governors
failed to regain control of the streets. The protests erupted over the death of George Floyd, a
46-year-old African-American who died in Minneapolis police
custody after being pinned beneath a white officer's knee for
nearly nine minutes.
Elsewhere, the pound rose to a one-month high of $1.2567
GBP=D3 after reports that Britain may be willing to compromise
on fisheries and trade rules if the European Union agrees to
back off from its demands related to regulatory alignment and
fishing access. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Dollar fell since mid-March https://tmsnrt.rs/3031wIj
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>