FOREX-Dollar slips as investors focus on recovery outlook

* AUD hits highest since Feb, commodity currencies gain
* U.S. street clashes add caution but focus on virus
recovery
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, June 1 (Reuters) - The dollar slipped on Monday
as investors looked past unrest in the United States to the
global economic recovery from the coronavirus and hoped for an
easing in Sino-U.S. tensions.
The risk-sensitive Australian dollar AUD=D3 shrugged off
early pressure and gained 0.4% to hit a three-month high of
$0.6703.
The euro was firm and sterling tested a three-week high. The
kiwi NZD=D3 and the oil sensitive Canadian dollar and
Norwegian krone all rose about 0.3%, even as oil prices eased.
"Market participants believe that the worst of the health
and financial and economic crises are now behind us," said
Commonwealth Bank of Australia FX analyst Joe Capurso.
"That's supportive for commodity prices...and if we're past
the worst of it, then commodity currencies tend to do well and
the U.S. dollar tends to do poorly in the early stages of a
recovery," he said.
Data on Sunday painted a mixed picture of China's recovery,
with momentum gaining in the construction and services sector
even as factory activity growth slowed a touch. Against a basket of currencies =USD the dollar had its
worst month this year in May and was under pressure on Monday,
dipping by a fraction to 98.166.
At-times violent demonstrations against police brutality in
the United States, which weighed on the mood in early trade and
perhaps capped further gains, were unlikely to move the dial on
the outlook for the U.S. economy, Capurso said.
What began as peaceful demonstrations over the death of
George Floyd, who died as a white Minneapolis police officer
knelt on his neck, has become a wave of outrage that has many
cities braced for another night of violence. Stocks dipped on unrest rippling across the country.
MKTS/GLOB
But currencies seemed to carry over the tone from last week,
which ended with relief that U.S. President Donald Trump made no
move to junk the Phase 1 with China.
Relations between Beijing and Washington have nosedived
through the COVID-19 pandemic, but investors were relieved that
Trump's move did not - so far - escalate tension over Hong Kong
into a broader trade dispute.
"It's tough to be a bear at the moment and the path of least
resistance for risk remains to the upside in my opinion," said
Chris Weston, head of research at Melbourne brokerage
Pepperstone.
"We've moved past Trump's China speech without the market
hearing anything that will upset China too greatly and promote
an immediate reaction."
The Chinese yuan CNH=D3 , which had firmed sharply on
Friday, was steady near where it left off at 7.1367 per dollar.
CNY/
The euro EUR=EBS held steady at $1.1118, just below a
two-month high of $1.1145 hit on Friday as investors drew
confidence from the European Union's plans for a coronavirus
recovery fund.
The pound GBP= rose 0.3% to $1.2379, close to a three-week
peak hit on Friday, as Britain moves out of lockdown.
Competitive sport can resume from Monday, the government
said on Sunday.