FOREX-Dollar stumbles as recovery hopes boost Asian FX

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Dollar falls 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 surged to a five-month high against the
dollar, as funds headed toward economies that are seen to be
recovering the fastest from the coronavirus pandemic.
China's yuan edged higher after a private survey showed the
services sector in the world's second-largest economy returned
to growth, which could bolster expectations for economic
recovery.
The greenback also fell against the British pound, the yen,
and the 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 surged more than 1% to
$0.6982, the highest since Jan. 3.
The Aussie pared its gains after data showed the Australian
economy contracted as expected in the first quarter, but traders
say sentiment has turned bullish because lockdown restrictions
are easing and commodity prices are rising.
Across the Tasman Sea, the New Zealand dollar NZD=D3 rose
to $0.6430, the highest since March 9.
The greenback also slumped to a one-month low of $1.2615
against the British pound GBP=D3 .
In onshore trade, the yuan CNY=CFXS briefly touched its
strongest since May 13 before settling at 7.1068 per dollar
after the Caixin/Markit services Purchasing Managers' Index
showed China's services sector returned to growth in May for the
first time since January. 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 grinded lower against safe-haven currencies
due to concerns about the widening economic impact of protests
in the United States.
The dollar bought 0.9613 Swiss franc CHF=D3 , close to a
two-month low.
The U.S. currency fell 108.47 yen JPY=EBS , pulling back
from a two-month high of 108.85 yen reached early in Asian
trading on Wednesday.
The U.S. Department of Defense has moved about 1,600 U.S.
Army troops into the Washington, D.C., region, the Pentagon said
on Tuesday, after several nights of violent protests.
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 confused about the market's direction.
The euro EUR=D3 bought $1.1186 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, when it meets 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)

(Editing by Sam Holmes and Jacqueline Wong)