* G7 meeting kicks off event-risk filled week
* Swiss Franc, Japanese yen gains
* Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, June 8 (Reuters) - The dollar was set for its biggest weekly drop in eleven weeks while perceived safe-haven currencies like the Japanese yen and the Swiss franc climbed on Friday as markets shifted to wait-and-watch mode before an event-packed week.
Before a likely acrimonious G7 meeting was due to kick off in Quebec later in the day, traders cut risky bets after three weeks of gains in equities and higher-yielding assets.
Next week’s expected hike in U.S. interest rates, a European Central Bank policy meeting and a Brexit bill vote all pose risks for currency traders and could yank currencies out of recent trading ranges. For a factbox, see
“A combination of the G7 meeting and other major events such as the Trump-Kim summit next week is also keeping investors on edge,” said Constantin Bolz, a fund manager at Portfolio Concept, a German-based private wealth management firm.
While the dollar edged a quarter of a percent higher against a basket of its rivals at 93.65, it was poised to notch up its biggest weekly drop since late March.
Trade issues between the United States and its major trade partners will be in the spotlight, with the Mexican peso and the Canadian dollar leading losers.
The peso fell to its weakest level against the dollar in 16 months on Friday.
High yielding currencies were a sea of red with only the Swiss franc and the Japanese yen higher on the day.
“Safe-haven assets are in demand,” said Christin Tuxen, a currency strategist at Danske Bank.
The dollar has come under pressure this week as the euro bounced back from 10-month lows thanks to an ebb in Italian political concerns and speculation that the ECB could signal intentions to start unwinding its massive bond purchasing programme when it holds a policy meeting on June 14.
The euro was broadly flat at $1.1778 after rising to a three-week high of $1.1840 overnight.
It was up more than 1 percent on the week and was set to post its biggest weekly gain since mid-February.
While expectations have grown the ECB will signal its intent to wind down its bond purchase programme, ING strategists believe the Italian political situation and the potential of a breakout in trade tensions would stay the ECB’s hand.
“Therefore, we do not expect a clear announcement of an end to QE next week but rather hidden hints during the question and answer session,” they wrote in a note.
Elsewhere, the Australian dollar fell more than 0.7 percent in early London trading at $0.7564 and is poised for its biggest weekly drop in a month.
But despite this raft of events containing potential risk, overall currency volatility remained at low levels with implied volatility on one month euro/dollar segment still below February highs.
Reporting by Saikat Chatterjee Editing by Raissa Kasolowsky