FOREX-Dollar hits 6-wk low vs yen ahead of UK vote, Comey testimony and ECB decision

By Kitco News / June 05, 2017 / www.kitco.com / Article Link

* Dollar/yen slips below 110.00 to 6-week low

* Caution begins to mount ahead of UK elections, Comey testimony

* Aussie slips after current account data disappoints, awaits RBA

* RBA widely expected to stand pat, focus on its economic view


(Updates throughout)

By Shinichi Saoshiro

TOKYO, June 6 (Reuters) - The dollar hit a six-week low against the safe-haven yen on Tuesday as caution mounted ahead of Britain's election, a European Central Bank meeting, and former FBI Director James Comey's testimony to a Senate committee - all of which are set for Thursday.

The dollar was down 0.6 percent at 109.770 yen , its lowest since April 25. Initially buoyed by an overnight bounce in U.S. yields, it had briefly risen to 110.510 early in the session.

The greenback has been firmly on the defensive since Friday's weaker-than-expected U.S. non-farm payrolls report prompted investors to pare back expectations of future interest rate increases by the Federal Reserve.

"It's difficult to pinpoint a single factor but the UK elections and Comey's testimony will take place on the same day, which is making the market nervous," said Bart Wakabayashi, Tokyo Branch Manager of State Street Bank.

"The dollar is already on the defensive after Friday's jobs data, and now its facing potential geopolitical risk in the form of Comey's testimony."

Comey, the FBI director fired by U.S. President Donald Trump in May, will be grilled by the Senate Intelligence Committee on whether Trump tried to get him to back off an investigation into alleged ties between the president's 2016 campaign and Russia. In Britain, the latest opinion poll, by Survation for ITV television, showed Prime Minister Theresa May's lead over the opposition Labour Party holding at just 1 percentage point ahead of Thursday's election. Sterling was a shade higher at $1.2921 following its rise overnight to a 10-day high of $1.2940.

The euro pared overnight losses and rose 0.2 percent to $1.1274 , edging back towards a seven-month high of $1.1285 reached on Friday.

The common currency's advance was relatively slow as a wait-and-see mood prevailed ahead of Thursday's European Central Bank policy meeting, which is likely to result in another baby step towards removing the extraordinary monetary stimulus. The dollar index against a basket of major currencies went as low as 96.601 , its weakest since Nov. 9.

The Australian dollar was down 0.3 percent at $0.7464 after Australia posted current account data for January-March. The deficit was the smallest in more than 15 years, but it still disappointed investors who had hoped for a rare surplus. Investors awaited a Reserve Bank of Australia's policy decision due later on Tuesday for further cues.

The RBA is widely expected to keep interest rates unchanged at a record low of 1.5 percent and focus was on its stance on the domestic economy in the wake the recent drop in iron ore prices, a relatively high unemployment rate and sluggish wage growth. (Reporting by Shinichi Saoshiro; Editing by Simon Cameron-Moore)

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