* Fed to begin corporate debt buying
* Trump administration mulling $1 tln infrastructure spend -
BBG
* AUD, NZD extend gains
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, June 16 (Reuters) - The dollar slipped and
riskier currencies rallied on Tuesday as the U.S. Federal
Reserve prepared to start its corporate bond buying scheme,
while a report flagging the possibility of more fiscal stimulus
helped underpin investor sentiment.
The Fed said it would start purchasing corporate debt on
Tuesday as part of an already announced stimulus scheme, and
launched its Main Street Lending Program for
businesses. The move boosted confidence across asset classes and
underpinned risk-sensitive currencies like the Australian and
New Zealand dollars.
Investor sentiment was further lifted by a Bloomberg News
report saying that President Donald Trump's administration is
mulling a nearly $1 trillion infrastructure programme to boost
the economy, citing anonymous sources. Taken together, the news served as more proof that
authorities will "do what it takes" to get the world's biggest
economy back on track, said Imre Speizer, FX analyst at Westpac
in Auckland.
Against a basket of currencies the dollar =USD was broadly
steady at 96.489, about 1% below Monday's high of 97.396. The
greenback slipped against most Asian currencies. EMRG/FRX
The Australian dollar AUD=D3 extended gains made late on
Monday to hit $0.6977, two cents or almost 3% above the two-week
low it touched a day ago. The New Zealand dollar NZD=D3
briefly pushed above 65 cents to $0.6508. AUD/
Elsewhere, the euro EUR= edged up to $1.1343 and sterling
GBP= rose 0.6% to test its 200-day moving average at $1.2680.
DON'T FIGHT THE FED
The Fed will make its corporate debt purchases in the
secondary market, and said it would also be buying bonds
directly from issuers "in the near future". The combined size of
the primary and secondary programmes is up to $750 billion.
Individual investment grade bonds, with a remaining maturity
of five years or less, are eligible for Fed purchase.
While Morgan Stanley figures showed that represented only a
small percentage of the U.S. corporate debt universe, it proved
enough on Tuesday to support investor confidence.
"It just seems to reinforce that message that you shouldn't
and can't fight the Fed here, and everything follows from that
really," said National Australia Bank head of FX strategy Ray
Attrill.
Still, markets have a wary eye on Fed Chair Jerome Powell's
Senate Banking Committee testimony at 1400 GMT, given his gloomy
view on the economic outlook, and on the coronavirus' spread.
Concerns about the depth of economic damage and a growing
second wave of infections triggered a sell-off in riskier assets
last week and during Monday's Asian session.
While the Japanese yen JPY= was a touch weaker on the day
at 107.44 on Tuesday, it has again settled into ranges held
since April, suggesting some investors remained cautious.
The Bank of Japan kept monetary settings steady on Tuesday
and stuck to its view that the economy will gradually recover
from the coronavirus pandemic. Governor Haruhiko Kuroda is due
to hold a news conference at 0630 GMT. Global cases of the novel coronavirus reached over 8 million
on Monday, as infections surge in Latin America and the United
States and China grapple with fresh outbreaks. Beijing has banned high-risk people from leaving the Chinese
capital to stop the spread of a fresh outbreak, while New
Zealand reported two new cases related to recent travel from the
UK, ending a 24-day streak of no new infections in the country.
Later on Tuesday, British labour market data due around 0600
GMT may also offer clues as to the Bank of England's next move
at its Thursday meeting.
Traders are expecting it will expand its asset-purchasing
programme by around 100 billion pounds ($126 billion).
($1 = 0.7919 pounds)