* Dollar/yen pressured by caution during US-Japan economic
* Aussie down 0.5 pct on weaker iron ore prices
* Sterling rises on UK govt call for June 8 election
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
By Ritvik Carvalho
LONDON, April 18 The dollar slipped against the
yen on Tuesday, pressured by nerves over economic talks between
the United States and Japan, while Britain's pound soared after
Prime Minister Theresa May called for an early general election.
Investors are watching ongoing U.S.-Japan economic talks for
further signs of the direction U.S. trade policy could take
under President Donald Trump, who campaigned on a protectionist
platform and has complained of countries artificially weakening
The dollar gained overnight against the yen on comments by
U.S. Treasury Secretary Steven Mnuchin that were seen favouring
long term dollar strength, but reversed direction to trade 0.1
percent lower at 108.68 yen in morning trade in Europe.
Upbeat words from the U.S. and Japan after the first round
of talks in Tokyo failed fully to quell worries among investors
that Japan's long-running efforts to weaken the yen will affect
"The talks ... are of potentially of significant consequence
because the tone taken between the U.S. and Japan on trade
really could give us a better idea about how far the U.S. is
prepared to go down the road of protectionism," said Jane Foley,
currency strategist with Rabobank in London.
Concerns about North Korea and French presidential elections
also kept a lid on the dollar against the yen - traditionally a
haven for capital in the face of political and economic stress -
which has surged in the past two weeks.
"This morning perhaps the geopolitical tension has eased
just a small amount. We have of course seen Trump suggest the
main movements against (North) Korea are likely to be economic
sanctions rather than military," Foley said.
Sterling surged to its highest levels since early February,
up 0.9 percent at $1.2679, after May made a surprise call for an
early general election to be held on June 8.
Analysts said markets were taking the move as a positive as
polls show May likely to win the election, and a victory could
strengthen her party's majority in government ahead of Brexit
negotiations, reducing political uncertainty a
The euro was 0.4 percent higher at $1.06840, having
seen limited movement on Monday when many European markets were
shut for the Easter holiday.
But investors were on edge ahead of this week's first round
of the French presidential elections, with the one-week cost of
hedging euro swings versus the dollar around its highest since
before Italy's constitutional referendum last December.
Weaker prices for iron ore continued to weigh on the
Australian dollar, which dipped 0.6 percent to $0.7540 after
rising to a two-week high above $0.7600 on the back of upbeat
Chinese growth data.
"Recent comments from the Reserve Bank of Australia (RBA)
suggest that Australian policymakers are more likely to stay on
hold going forward. In other words, AUD/USD is likely to remain
range bound," analysts at Credit Suisse wrote in a note to
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(Reporting by Ritvik Carvalho; additional reporting by Tokyo
Markets team; Editing by Tom Heneghan)