News: FOREX-Euro hits 1-week peak on upbeat data, dollar retreats

• Euro breaks above $1.12 on reduced pessimism on European growth
• Dollar index pulls back further from near two-year peak
• Yen hits three-week high vs dollar after China PMI data
• Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Updates market action, changes byline, dateline, previous LONDON)

The euro climbed to a one-week high against the dollar on Tuesday after first-quarter economic growth figures on the euro zone beat market expectations, dispelling some pessimism over the zone's common currency.

Mixed U.S. data and caution ahead of a two-day Federal Reserve meeting pushed the dollar further away from a near two-year high.

Euro zone economic growth accelerated to 0.4% in the first three months of 2019, recovering from a slump in the second half of last year, data showed on Tuesday.

The strong data offered some relief to traders after a disappointing manufacturing PMI survey this month and cautious comments from European Central Bank policymakers raised concerns that the broader economy is struggling to gain traction.

"The (overall) data have been coming in better than expected. The euro is the biggest short in the market right now," said Steven Englander, global head of G10 FX research at Standard Chartered Bank in New York.

Higher-than-expected growth figures could squeeze some hedge funds who have been amassing large short positions in the euro, worth a net $14.8 billion in the week to April 23.

At 11:33 a.m. (1533 GMT), the euro EUR=EBS was 0.16% higher at $1.12025 after the euro zone growth data. The currency was on track to fall 0.13% in April, bringing its year-to-date loss against the greenback to 2.32%.

An index that tracks the dollar against the euro, yen, sterling and three other currencies .DXY was down 0.24% at 97.619. It hit a 23-month high at 98.330 last Friday.

"We feel the dollar-buying move was a bit overdone," Englander said.

Earlier Tuesday, data showed U.S. labor costs grew 0.7% in the first quarter, reinforcing the notion that wage pressure would stay tame even although hiring has remained strong, the Labor Department said.

Moreover, U.S. Midwest factory activity unexpectedly fell in April to its weakest since January 2017, according to an index from MNI and the Institute for Supply Management-Chicago.

Analysts expect no policy changes coming out of the Fed's two-day policy meeting, which ends on Wednesday, but investors want to hear how Fed Chairman Jerome Powell resolves the divergence between solid economic growth and slowing inflation.

Trading volume was muted by Japanese markets being closed for the Golden Week holiday. Activity will likely drop off further on Wednesday when China and much of Europe will be off for the May Day holiday.

The Japanese yen rallied to a three-week high after China's official Purchasing Managers' Index dipped to 50.1 April.

It JPY=EBS was up 0.23% at 111.385 yen per dollar.

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	Currency bid prices at 11:34AM (1534 GMT) 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	  EUR=		$1.1204		$1.1185	 +0.17%		 -2.31%	  +1.1230	 +1.1176 
 Dollar/Yen	   JPY=		111.3600	   111.6300	-0.24%		 +1.00%	  +111.6900   +111.2400 
 Euro/Yen		 EURJPY=	 124.84		 124.94	  -0.08%		 -1.09%	  +125.0800   +124.4800 
 Dollar/Swiss	 CHF=		1.0194		 1.0195	  -0.01%		 +3.87%	  +1.0204	 +1.0175 
 Sterling/Dollar  GBP=		1.3035		 1.2936	  +0.77%		 +2.18%	  +1.3048	 +1.2927 
 Dollar/Canadian  CAD=		1.3431		 1.3456	  -0.19%		 -1.51%	  +1.3480	 +1.3425 
 Australian/Doll  AUD=		0.7038		 0.7055	  -0.24%		 -0.16%	  +0.7069	 +0.7032 
 ar																							  

 Euro/Swiss	   EURCHF=	 1.1424		 1.1403	  +0.18%		 +1.51%	  +1.1445	 +1.1389 
 Euro/Sterling	EURGBP=	 0.8594		 0.8646	  -0.60%		 -4.34%	  +0.8653	 +0.8591 
 NZ			   NZD=		0.6667		 0.6667	  +0.00%		 -0.74%	  +0.6681	 +0.6656 
 Dollar/Dollar																				   

 Dollar/Norway	NOK=		8.6399		 8.6557	  -0.18%		 +0.01%	  +8.6737	 +8.6108 
 Euro/Norway	  EURNOK=	 9.6815		 9.6820	  -0.01%		 -2.27%	  +9.6970	 +9.6634 
 Dollar/Sweden	SEK=		9.4995		 9.5099	  +0.09%		 +5.98%	  +9.5248	 +9.4722 
 Euro/Sweden	  EURSEK=	 10.6469		10.6370	 +0.09%		 +3.73%	  +10.6565	+10.6220 
	   
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Net Euro short positions	http//tmsnrt.rs/2GUfBy1 

World FX rates in 2019 http://tmsnrt.rs/2egbfVh

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