* Dollar remains broadly strong vs most major currencies
* Nordic currencies rise vs dollar, euro
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates prices, adds latest news)
By Olga Cotaga
LONDON, May 12 (Reuters) - The U.S. dollar dipped on Tuesday
after The World Health Organization said some treatments appear
to be limiting the severity or length of the COVID-19
respiratory disease.
Even a small hint of positive coronavirus news limits the
dollar's appeal as a safe-haven currency as investors eye
riskier assets, though declines were kept in check by growing
fears of a second wave of coronavirus infections.
The U.S. currency was also supported by the Federal Reserve
playing down the likelihood of negative U.S. interest rates,
boosting the the dollar's yield attraction.
Fed policymakers say they will do what it takes to cushion
an economy crushed by widespread lockdowns aimed at slowing the
spread of the coronavirus but are likely to stop short of
negative interest rates.
New coronavirus infections have been found in China, South
Korea and Germany, where respective governments have eased
lockdown restrictions. A re-emergence of coronavirus cases could dent a global
economic recovery on the back of an injection of monetary and
fiscal stimulus.
German economic output is likely to have declined by 20-25%
for several weeks during the coronavirus outbreak, the KfW state
development bank said on Tuesday. "While the number of cases was relatively small, they do
play into market fears over the threat posed by a second wave of
COVID-19 infections and highlight the challenging path ahead for
the global economy," said MUFG currency analyst Lee Hardman.
The euro was last up 0.2% against the U.S. currency at
$1.0830 EUR=EBS , though still not too far from the $1.0636 low
touched at the end of March when the pandemic sent markets into
turmoil.
The Japanese yen rose 0.2% to 107.44 against the dollar
JPY=EBS .
The Australian dollar AUD=D3 was the biggest mover in
Asian trading, dipping to a five-day low of 0.6432 after China
banned some Australian meat imports. It later pared losses as
Australia's trade minister played down the issue as a
technicality and was last trading up 0.3%.
Nordic currencies rose, however, with the Norwegian crown
NOK=D3 last up 0.8% at 10.2270.
Richard Falkenhall, senior FX strategist at SEB, said
investors were anticipating Norges Bank buying more crowns going
forward as the country looks to widen its fiscal deficit,
supporting it with capital from the government's oil fund.
Norway will sharply raise spending by its trillion-dollar
sovereign wealth fund this year, the government said on Tuesday,
exceeding a self-imposed cap for the first time in more than a
decade to aid an economy reeling from the coronavirus crisis.
As the fund is denominated in foreign currency, this would
lead to more crown buying, Falkenhall said, adding that SEB
expects the central bank to increase purchases to 2.2 billion
crowns a day from the current 2.1 billion crowns.
The Swedish crown SEK=D3 followed suit, rising 0.7% to
9.8025.
The greenback was broadly supported by the possibility of
U.S. President Donald Trump instructing a federal pension fund
not to buy Chinese equities, making investors cautious on
U.S.-Sino relations.
The White House on Monday named three nominees to sit on a
board that oversees federal employee pension funds, raising the
potential for the reversal of a decision to allow one of the
funds to invest in Chinese companies under scrutiny from
Washington. Trump also said he opposed a reopening of so-called Phase 1
trade negotiations after China's state-run Global Times floated
the idea on Monday.
Traders will be looking for Fed Chairman Jerome Powell's
speech on current economic issues on Wednesday, when his views
on the future of the monetary policy will be scrutinised
closely.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Euro steady vs dollar but close to March low IMAGE https://tmsnrt.rs/2WpJ9uM
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>