FOREX-Dollar wallows as focus shifts to Fed meeting

* AUD, NZD touch multi-month highs before swift retreat
* Yen extends gains on speculation of Fed yield-curve
control
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook and Stanley White
SINGAPORE/TOKYO, June 9 (Reuters) - The dollar nursed losses
on Tuesday as surging commodity currencies paused for breath and
a rising yen pointed to investor trepidation over the U.S.
Federal Reserve's next move.
The yen JPY= extended big overnight gains to a week-high
108.03 per dollar as investors weigh the possibility of
stepped-up bond buying - or even simply a very dovish outlook -
from the Fed which meets on Tuesday and Wednesday.
At the same time the Australian and New Zealand dollars
swiftly retreated from milestone peaks in early trade.
The kiwi NZD=D3 hit a four-and-a-half month high of
$0.6576 on the first morning since New Zealand ended all social
restrictions - save for its closed borders - after declaring the
nation free of infections on Monday. The Aussie AUD=D3 briefly touched a 10-month top of
$0.7040 and sterling GBP= made a three-month high of $1.2755,
though all three pulled back to steady by mid-morning.
"Japanese names have been very active since Monday in
dollar/yen, trying to trade off the chance of some kind of
yield-curve control from the Fed," said Yukio Ishizuki, foreign
exchange strategist at Daiwa Securities in Tokyo.
"I personally don't think yield curve control is necessary
now, but the dollar is under clear selling pressure."
Last week U.S. jobs data for May caught markets completely
off-guard with an unexpected increase in employment and over the
weekend Chinese export numbers for last month were stronger than
forecast.
"Economies are smashed, but not smashed as badly as was
expected and I think that's the key to this whole rally," said
Westpac FX analyst Imre Speizer in Auckland.
"The latest high-frequency data shows you that the recovery
probably looking more like a V. It's a relief rally, relief that
it's not as bad as feared."
In New Zealand, an ANZ survey of traffic movement - seen as
a forward indicator of economic growth - saw a sharp rebound in
heavy vehicle traffic last month.
The virus also appears to be in retreat in Australia where
re-opening is gathering pace, prompting RBC Capital Markets to
make a modest improvement in its 2020 GDP forecast on Monday
lifting it to better than -4% from -4.5%.
The World Health Organization on Monday warned that the
COVID-19 pandemic is "far from over," as a record number of new
daily infections were reported.
But investors took comfort from cases trending lower in the
United States and falling to a fresh low in New York, even as
testing has ramped up. "If we continue to trend lower ... this will go a long way
in re-aligning consumer risk assessment about the virus," said
RBC Capital Markets' Chief U.S. Economist, Tom Porcelli.
Elsewhere the Chinese yuan CNH=D3 held on to chunky gains
for the week so far.
Other moves were held in check as markets wait for the
outcome of the Fed meeting. The euro EUR= last sat at $1.1304
and the pound at $1.2736.
A statement from the Fed is due at 1800 GMT on Wednesday
followed by a news conference half an hour later.
It is not expected to change interest rate settings and,
since last week's job figures, futures pricing shows investors
have abandoned expectations of rates dipping below zero next
year.