FOREX-Euro consolidates gains following lift from extra ECB stimulus

* Safe-haven currencies soft on economic recovery hopes
* U.S. jobless rate expected to soar near 20%
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Julien Ponthus
LONDON, June 5 (Reuters) - The euro consolidated its gains
on Friday after receiving a boost from the European Central
Bank's announcement a day earlier that it was expanding its
stimulus programme, putting the single currency on course to
rise for a third straight week.
The euro rose to $1.1384 EUR= against a weakening dollar,
its highest level since March 10, but then slipped back to
1.1310, down just 0.06% on the day.
It remains on course for a weekly jump of 2.5% although it
may not log a ninth straight day of gains, which would be its
longest rising streak since October 2004.
The dollar index =USD staged a limited comeback, rising
0.08% to 96.84 after earlier losses but is still set for its
third consecutive week of losses and remains near its lowest in
nearly three months.
Sentiment towards the euro was upbeat in early trading.
"The euro will keep rallying and move towards $1.20," Peter
Chatwell, head of rates at Mizuho Bank, said, adding that the
ECB had "dramatically" supported the euro by reducing tail risk.
The ECB increased its emergency bond purchase scheme to 1.35
trillion euros and extended it to mid-2021. "The rotation out of U.S. dollar generally continued
unabated overnight," said Jeffrey Halley, an analyst at OANDA.
Support for the euro was bolstered on Wednesday when Germany
launched a 130 billion euro stimulus package after last month
supporting a European Union recovery fund that would bring the
bloc closer to a fiscal union. Commerzbank analysts noted that the recent rise of the euro
brought a risk of a correction and that the approval of the EU
recovery fund would be key to keep the currency higher.
"Anyone who knows European politics is aware of the fact
that an agreement on the recovery fund is likely to be
difficult, will take a long time and that an agreement is only
likely to be reached late at night and at the very last minute",
they warned.
"Until then the current EUR optimism will therefore be put
to the test", they added.
Against the Swiss franc the euro hit a fresh five-month high
of 1.0875 EURCHF= then retreated slightly to 1.0848.
Recent moves away from so-called safe-haven currencies
reflected broad optimism in financial markets as easing
coronavirus lockdown restrictions supported economic recovery
hopes.
The Australian dollar AUD=D3 , often seen as a risk proxy
in the currency market, rose 0.3% to $0.6968, briefly moving
earlier above $0.70 for the first time since early January.
"You've got the creeping optimism of the global economy
being past the worst and thinking that things are going to be up
from here," Commonwealth Bank of Australia analyst Joe Capurso,
said, adding this supported "commodity currencies like the
Aussie and like the Kiwi".
In the United States, official employment data due later in
the day is expected to show non-farm payrolls fell by 8 million
in May, after a record 20.537 million plunge in April.
The U.S. unemployment rate is forecast to hit 19.8%, a
post-World War Two record, from 14.7% in April.