FOREX-Dollar stays firm as traders look to U.S. data for policy cues

* USD hits three-week peak on JPY, steady elsewhere
* KRW dips on N. Korea tension
* Ethereum hits record peak
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, May 3 (Reuters) - The dollar clung to a recent
bounce on Monday as investors made a cautious start to a week
crammed with central bank meetings and big-ticket U.S. economic
data, waiting for clues on the outlook for global inflation and
for policymakers' responses.
Trade was thinned by holidays in Japan and China, which kept
a lid on volatility, leaving the greenback to trade where it
settled after a Friday leap. It held at $1.2020 per euro
EUR=EBS and crept to a three-week high of 109.58 yen JPY= .
The dollar index =USD , measured against six major
currencies, held at 91.322.
The index dropped 2% through April as a positive view of
global recovery prospects lifted trade-exposed currencies at the
dollar's expense, but bounced with upbeat U.S. consumption data
on Friday.
"We expect the dollar to trend lower because of the
improving global economic outlook," said Commonwealth Bank of
Australia analyst Kim Mundy in an emailed note.
"Nevertheless," she said "the risk of short bouts of dollar
strength remain if solid data push U.S. Treasury yields
materially higher."
The Australian and New Zealand dollars were marginally
firmer on Monday, though not enough to recoup a dip suffered on
Friday. AUD/
The Aussie AUD=D3 rose 0.1% $0.7718 to trade around its
20-day moving average, while the kiwi NZD=D3 edged 0.2% higher
to $0.7171, also just above its 20-day moving average. Sterling
GBP= steadied at $1.3825. GBP/
Elsewhere in Asia China's yuan drifted lower to 6.4781 per
dollar in offshore trade following hawkish remarks from U.S.
Secretary of State Antony Blinken. The South Korean won KRW= hit a one-week low after North
Korea vowed it would respond to what it regards as hostile U.S.
policy, while pressure for a national lockdown in India pushed
the rupee INR= a little lower. In crypto markets, ethereum broke past $3,000 to post a
fresh record peak of $3,061.17. DELUGE
Purchasing Managers Index figures for manufacturers were
positive in Asia on Monday and those due later on Monday are
expected to show growth picking up speed in Europe and the
United States. However the week's major focus will be on U.S.
manufacturing surveys due Wednesday and April labour market
numbers on Friday.
Forecasts are that 978,000 jobs were created in the month.
However analysts say the market response to a surprise either
way may be hard to guess, as investors have begun to fret that
strong data may prompt central bankers to taper their support.
"The risk is for a hotter number," said Chris Weston, head
of research at broker Pepperstone in Melbourne.
"But will good numbers lead to a broad risk-off vibe, as
traders' price in higher rate expectations, and the dollar
rallies," he added. "I suspect we're getting to a point where
really good data could start to become bad for markets."
Dallas Fed President Robert Kaplan caused a stir on Friday
by calling for beginning the conversation about tapering,
although Federal Reserve Chair Jerome Powell has been clear that
he is likely to be patient.
Powell is due to speak later on Monday and will be followed
by a raft of Fed officials this week. Central bank policy
meetings are also scheduled this week in Australia, Britain and
Norway.
In Australia, no policy changes are expected on Tuesday
although traders will look to a speech by deputy Reserve Bank of
Australia governor Guy Debelle on Thursday for insight into the
bank's thinking around its bond purchases outlook.
Asset purchases are likewise the focus when the Bank of
England meets on Thursday, as well as perhaps an upgrade of its
economic outlook, while Norges Bank - which projects hiking
rates this year - is expected to stick with its hawkish tone.

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