* Investors shrug off North Korea's latest missile launch
* Fed's Williams: US at or near full employment, price goals
* Euro net long positions rise to highest in over 3
* Sterling inches higher but seen pressured by latest polls
* S Africa's rand jumps after Zuma defeats no-confidence
TOKYO, May 29 The dollar edged higher against a
basket of currencies on Monday, moving away from last week's
6-1/2-month lows and shrugging off news of North Korea's latest
missile test as investor attention turned to the Federal
Reserve's expected interest rate hike next month.
The dollar index, which tracks the U.S. currency against a
basket of six major rivals, inched up 0.1 percent to 97.502
, holding well above last week's nadir of 96.797, its
lowest since Nov. 9.
San Francisco Federal Reserve President John Williams said
in Singapore on Monday that medium-term trends in U.S. inflation
remained "pretty favourable," despite some recent soft consumer
The U.S. economy was at or near the Federal Reserve's goals
of full employment and stable prices, Williams said, adding that
the U.S. central bank wanted to ensure markets stayed calm as
the Fed slowly returned interest-rate policy to normal.
Data on Friday indicated the U.S. economy was modestly
expanding, which might allow the Fed to raise interest rates
further and to begin paring its $4.5 trillion balance sheet.
Gross domestic product grew at an annual 1.2 percent in the
first quarter, faster than the 0.7 percent reported last month,
though softening business investment and moderate consumer
spending might impede an acceleration in the second quarter.
Rates futures implied traders saw a nearly 90 percent chance
the Fed would increase rates by a quarter point to 1.00-1.25
percent at its June 13-14 policy meeting, according to CME
Group's FedWatch program.
"The market is waiting for the U.S. employment data on
Friday," said Masashi Murata, currency strategist for Brown
Brothers Harriman in Tokyo.
The nonfarm payrolls report was likely to show that labour
market conditions remain solid, which he said "will support the
expectation that the Fed is likely to hike rates."
The greenback edged up slightly to 111.37 yen,
holding its ground despite a cautious backdrop that usually
gives Japan's perceived safe-haven currency a lift.
North Korea fired what appeared to be a short-range
ballistic missile on Monday that landed in the sea off its east
coast, South Korea's military said, the latest in a series of
missile tests defying world pressure and threats of more
"The markets are used to news of North Korea's missile tests
by now, and the dollar/yen is unlikely to move much unless there
is some further escalation of the situation," said Kumiko
Ishikawa, FX market analyst at Sony Financial Holdings in Tokyo.
With U.S. and UK markets closed on Monday for the Memorial
Day holiday, major currency pairs were likely to tread water,
with few incentives to take new positions.
Continuing political turmoil in Washington also kept
investors cautious. U.S. President Donald Trump, returning to
the White House after a nine-day trip to the Middle East and
Europe, attacked the media and dismissed leaks as "fake news" on
Sunday, following reports his son-in-law tried to set up a
secret channel of communication with Moscow before Trump took
The euro edged down 0.1 percent to $1.1165, after
notching a 6-1/2-month high of $1.1268 last week.
Net long positioning on the euro rose to its highest in more
than three years in the week through May 23, according to
calculations by Reuters and Commodity Futures Trading Commission
data released on Friday.
Fading political risk in France and a stronger eurozone
economy have led to heightened speculation that the European
Central Bank may scale back its massive monetary stimulus.
ECB President Draghi is scheduled to speak at the European
Parliament later on Monday. Last week Draghi said there was "no
reason to deviate from the indications" that the central bank
has already laid down.
Britain's pound edged up 0.1 percent to $1.2817 after
hitting a three-week low of $1.2775 on Friday in the wake of a
poll showing a shrinking lead for the ruling Conservatives ahead
of June 8 elections.
The latest weekend polls showed the Conservative Party's
lead over the opposition Labour Party has narrowed sharply since
last week's terror attack in Manchester, suggesting Prime
Minister Theresa May might not win by the landslide predicted
just a month ago.
Four opinion polls published on Saturday showed that May's
lead had contracted by a range of 2 to 6 percentage points,
indicating the election could be much tighter than thought when
she called the snap vote.
The South African rand, meanwhile, rose to a two-month high
of 12.6300 per U.S. dollar, after South African
President Jacob Zuma defeated a no-confidence motion against him
at a meeting of top officials of the ruling African National
Congress on Sunday.
The greenback was last down 0.5 percent at 12.7925 rand.
(Reporting by Tokyo markets team; Editing by Shri Navaratnam
and Eric Meijer)