* Dollar eases vs basket of six major currencies
* Euro stays firm, touches fresh 1-week high
* Q1 euro zone GDP coming up later on Tuesday
(Updates prices, adds comments)
By Masayuki Kitano
SINGAPORE, May 16 The euro touched a one-week
high on Tuesday ahead of the release of euro zone gross domestic
product data, as the dollar struggled to gain traction in the
wake of a surprisingly soft U.S. manufacturing report.
The euro rose 0.1 percent to $1.0986, having risen to
$1.0990 earlier. That was the euro's strongest level since May
8, when it climbed to a six-month high of $1.1024 after France's
With concerns about political risks in the euro zone having
receded after centrist Emmanuel Macron was elected France's
president over far-right nationalist Marine Le Pen, focus is
shifting back towards the outlook for monetary policy.
Investors are now focusing on when and how the European
Central Bank (ECB) could scale back its quantitative easing
given the recent strength in the euro zone economy.
"Long positions in the euro tend to be favoured now, given
the chances that the ECB could discuss the possibility of future
policy changes at its June meeting," said Shinsuke Sato, head of
FX trading group for Sumitomo Mitsui Banking Corporation in
"Overall, there seems to be a mood of looking for chances to
buy (euros) on dips," he added.
Later on Tuesday, the euro could take cues from the second
reading of the euro zone's January-March GDP growth, as well as
a speech by ECB Executive Board Member Benoit Coeure.
The dollar index, which measures the greenback's value
against a basket of six major currencies, eased 0.1 percent to
The greenback had come under pressure on Monday after the
New York Federal Reserve said its barometer on business activity
in New York state unexpectedly fell in May, sinking into
negative territory for the first time since October.
On the whole, Teppei Ino, analyst for Bank of
Tokyo-Mitsubishi UFJ in Singapore, said the weak reading on New
York manufacturing activity hasn't substantially altered the
positive sentiment toward the U.S. economy.
"I think people want to wait and see," Ino said, adding the
general view seems to be that the U.S. economy is still holding
Against the yen, the dollar fell 0.3 percent to 113.52 yen
, edging away from an eight-week high of 114.38 yen set
The greenback has risen 1.7 percent against the yen so far
this month, as risk sentiment improved after France's
Market expectations for the Federal Reserve to raise
interest rates in June have helped underpin the dollar recently.
"If strength in equities or rises in yields around the world
continues, that will probably result in a supportive environment
for the dollar against the yen," said Shinichiro Kadota, senior
FX strategist for Barclays in Tokyo.
(Reporting by Masayuki Kitano; Editing by Simon Cameron-Moore)