* Dollar sinks below 110 yen for first time in six weeks
* Yen also up almost 1 percent vs euro
* Three significant "risk events" due on Thursday
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, June 6 The dollar sank to its weakest
since mid-April against the yen on Tuesday, as economic data
drove U.S. government bond yields to lows not seen since Donald
Trump's election last year and investors sought refuge before
big events on Thursday.
Nerves over Britain's election that day showed through in a
fall in sterling risk reversals, options used to hedge against
or bet on falls in the pound, although the currency
steadied after a 3 percent dip in the past month.
A European Central Bank meeting and former FBI Director
James Comey's testimony to a Senate committee due on Thursday
also drove investors into the traditional security of the yen.
That took the dollar index, which measures its broader
strength against a basket of currencies to the lowest since Nov.
9 of last year.
"People are thinking what are the events we need to worry
about, and with things all coinciding on Thursday, a bit of risk
has been taken off the table," Jeremy Stretch, a strategist with
CIBC in London.
The dollar fell 0.9 percent to 109.28 yen, its lowest since
April 21, while the euro sank as low as 122.93 yen
With the Bank of Japan keeping 10-year Japanese bond yields
pinned to zero, the dollar-yen exchange rate has been closely
correlated for the past year with any shifts in U.S. 10-year
"It is worth pointing out that the U.S. 10-year is hovering
above the key technical level ... at 2.13 percent," Rabobank
analysts said in a morning note to clients.
"It must hold to prevent further retracement, with the
psychological level of 2 percent as the next potential target if
Treasury yields briefly dipped as low as 2.1290 as U.S.
investors arrived at their desks after 1130 GMT.
Comey, the FBI director fired by Donald Trump in May, will
be grilled by the Senate Intelligence Committee on whether the
U.S. president tried to get him to back off an investigation
into alleged ties between his 2016 campaign and Russia.
The threats to Trump and some of his senior advisers from
the affair have added to market doubts over the administration's
ability to deliver a promised boost to growth.
While U.S. economic data has worsened, in Europe it has been
improving and expectations have grown for some sort of change in
ECB rhetoric this week. Most traders, however, say it may now be
difficult for that to top the expectations priced into the euro.
"Central banks seem to be very good at leaking everything
before the event," said Richard Benson, co-head of portfolio
investment with currency fund Millennium Global in London.
"The euro looks stronger than most rate differentials would
suggest. I think all expectations for Thursday are in the
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Raissa Kasolowsky and Alexander Smith)