* Sterling outperforms, other pairs stick to ranges
* Carney tells Sunday Times UK rates may rise before pay
* Swiss franc, Norwegian crown ease after rallies
* Dollar steady after first weekly loss since early July
* Eyes on Jackson Hole meeting later in week
By Patrick Graham
LONDON, Aug 18 Sterling was the main mover on
major currency markets on Monday, recovering from multi-month
lows, while the Swiss franc retreated as investors' concerns
over Ukraine eased marginally.
The dollar, knocked back last week after a strong run since
early July, was roughly steady against the yen and euro and a
basket of currencies used to measure its broader strength,
hampered by U.S. Treasury yields that were close to 16-month
The pound rose after Bank of England Governor Mark Carney
said in a newspaper interview that UK interest rates may have to
rise even before real wages pick up, backtracking from comments
last week that suggested the opposite and prompted markets to
push back bets on a first rate hike.
"The comments in the (Sunday) Times were definitely a
surprise to markets and that's what is behind this move this
morning," said Adam Myers, head of European FX strategy with
Credit Agricole in London.
Sterling has taken a hammering over the past month, hurt by
the suspicion that all of the best news on the UK economy has
been priced in and that the bank might not be quite as quick as
some had expected to raise rates.
After a sixth straight weekly loss against the dollar, it
gained around a third of a percent against the euro and the
dollar in early European deals, trading at 80.04 pence per euro
Myers said the week might prove rocky for the dollar after
an uncertain performance so far in August. It has failed to
build on improvement which had prompted many analysts to predict
the greenback was finally on for a longer run higher.
The wait for the annual U.S. meeting of central bankers in
Jackson Hole, which starts on Thursday, might help hold off
bigger moves this week, Myers said, but there were risks to the
dollar particularly against the euro.
"After what was a very exciting July, the market has tried
both ways over the past couple of weeks," Myers said.
"The euro tried several times to break out higher last week
and was stopped each time around $1.34. I think the danger is we
may see that (barrier) broken this week."
The euro last traded at $1.3389, flat on the day and
well within the slim $1.3333-$1.3445 range seen so far this
month. The dollar bought 102.47 yen, a touch more than
Friday, while against a basket of currencies it edged up to
Worries that conflict between Russia and Ukraine was set to
intensify further drove a surge of money into traditional safe
havens like the yen and franc at the end of last week.
That play had eased somewhat on Monday and the franc in
particular fell back around a quarter of a percent against the
"While the geopolitical risk swirling over Ukraine still
holds the potential of spooking global markets, it does appear
as if participants are gradually becoming inured to it so long
as there is no overt cross-border military operation," said
Alvin Tan, a strategist with French bank Societe Generale in
Like Myers and several others, he warned of the potential
for a squeeze on the raft of investors who have bet on further
weakness of the euro on the back of the contrast bewteen broad
economic weakness in Europe and a solidifying U.S. recovery.
"I don't think we're going to run away with dollar
bullishness right now," said Jane Foley, a strategist with
Rabobank in London.
"The position adjustment on the euro, which really you can
trace back to May, has been quite substantial and I just think
we may be reaching the end of that."
Data on Friday showed that speculators reduced bullish bets
on the dollar in the week ended Aug. 12, net longs declining for
the first time in four weeks.
The Norwegian crown, like the franc a gainer last week with
the help of some more bullish domestic numbers on inflation,
also eased on Monday. It was down 0.2 percent against the dollar
and the euro by 1217 GMT.
(Editing by Susan Fenton)