FOREX-Aussie and sterling hit multi-year highs on recovery bets

* Dollar weakens further after weaker jobs data
* Aussie hits nearly 3-yr high, sterling reaches $1.40
* Euro rebounds, aided by strong factory survey data
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

(Adds new quote, chart, latest prices)
By Tommy Wilkes
LONDON, Feb 19 (Reuters) - The Australian dollar rose to
near a three-year high and the British pound scaled $1.40 for
the first time since 2018 on optimism about economic rebounds in
the two countries and after the U.S. dollar was knocked by
disappointing jobs data.
The U.S. currency had been rising in recent days as a jump
in Treasury yields on the back of the so-called reflation trade
drew investors. But an unexpected increase in U.S. weekly
jobless claims soured the economic outlook and sent the dollar
lower overnight. On Friday it traded down 0.3% against a basket of
currencies, with the dollar index at 90.309 =USD .
The Aussie rose 0.8% to $0.784 AUD=D3 , its highest since
March 2018. The currency, which is closely linked to commodity
prices and the outlook for global growth, has been helped by a
recent rally in commodity prices.
The New Zealand NZD=D3 dollar also gained, and was not far
off a more than two-year high, while the Canadian dollar
CAD=D3 rose too.
Sterling rose to $1.4009 on Friday, an almost three-year
high amid Britain's aggressive vaccination programme.
Given the size of Britain's vital services sector, analysts
say the faster it can reopen the economy, the better for the
currency. Sterling was also helped by better-than-expected
purchasing managers index flash survey data for February.

The U.S. dollar has been weighed down by a string of soft
labour data, even as other indicators have shown resilience, and
as President Joe Biden's pandemic relief efforts take shape,
including a proposed $1.9 trillion spending package.
Despite the recent rise in U.S. yields, many analysts think
they won't climb too much higher, limiting the benefit for the
dollar.
"Our view remains that the Fed will hold the line and remain
very cautious about tapering asset purchases. We think it will
keep communicating that tightening is very far off, which should
dampen pro-dollar sentiment," said UBS Global Wealth Management
strategist Gaétan Peroux and analyst Tilmann Kolb.
ING analysts said "the rise in rates will be
self-regulating, meaning the dollar need not correct too much
higher".
They see the greenback index trading down to the 90.10 to
91.05 range.
The euro rose 0.4% to $1.2134 EUR=EBS . The single currency
showed little reaction to purchasing manager index data, which
showed a slowdown in business activity in February. However,
factories had their busiest month in three years, buoying
sentiment.
The dollar bought 105.39 yen JPY=EBS , down 0.3% and a
continued retreat from the five-month high of 106.225 reached
Wednesday.

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(Editing by Hugh Lawson and Pravin Char)