FOREX-Dollar heads for loss on Fed backstop, receding coronavirus fears

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Dollar drifts lower on less safe-haven demand
* Pound recovers from PM Johnson scare
* Commodity currencies eye OPEC+ oil output

By Stanley White
TOKYO, April 10 (Reuters) - The dollar started Friday's
trade on a shaky footing and was on course for a weekly loss as
the U.S. Federal Reserve's massive new lending programme for
small companies and signs of a slowdown in coronavirus
infections reduced safe-haven demand.
The pound pulled ahead against the dollar and the euro as
markets breathed a sigh of relief after British Prime Minister
Boris Johnson left intensive care following his hospitalisation
for COVID-19 symptoms.
Currencies from oil-producing countries also held onto gains
against the U.S. currency, but the outlook remains uncertain as
an agreement between Saudi Arabia and Russia to cut oil supply
has failed to allay concern about massive oversupply.
Risk sentiment has steadily improved this week on tentative
signs that the pandemic is slowing in U.S. and European
hotspots, but some analysts remain cautious given so little is
known about the virus and as many nations continue to grapple
with the massive economic damage caused by the outbreak.
"The Fed has taken a lot of different measures, but the end
result is a large increase in the supply of dollars," said
Junichi Ishikawa, senior FX strategist at IG Securities in
Tokyo.
"Positive news about the virus reduces the kind of panicked
repatriation into dollars that we saw earlier this year. The end
result is gradual dollar weakness."
Against the euro EUR=EBS , the dollar last stood at
$1.0930, on course for 1.2% weekly decline.
The dollar traded at 0.9660 Swiss franc CHF=EBS , down 1%
for the week.
Trading is likely to be subdued on the day as financial
markets in Australia, Hong Kong, Singapore, Britain, and the
United States are closed for the Good Friday holiday.
The Fed on Thursday announced a $2.3 trillion programme to
offer loans to local governments and small and mid-sized
businesses, the latest step to backstop the U.S. economy as the
country battles the coronavirus crisis. The Fed has also slashed interest rates to zero, restated
quantitative easing, and increased dollar liquidity to combat a
shortage in money markets, leaving the dollar in the grip of
bears in the spot market.
New York, the U.S. state most afflicted by the coronavirus,
offered fresh evidence that the arc of the disease caused by the
virus was flattening. The greenback last traded at 108.51 yen JPY=EBS , unchanged
for the week as concern about an increase in coronavirus
infections and the declaration of a state of emergency in Japan
offset dollar selling.
The coronavirus first emerged in China late last year and
his since spread around the world, infecting more than 1.5
million and claiming more than 89,400 lives. The Australian dollar AUD=D3 , which is highly sensitive to
risk sentiment because of Australia's dependence on China and
the global commodities trade, jumped by 5.5% against the
greenback this week, highlighting easing stress in global
markets.
The pound GBP=D3 held steady at $1.2465 on Friday, and
headed for a 1.6% gain this week. Against the euro EURGBP=D3 ,
sterling was on course for its third consecutive weekly gain.
The British prime minister on Sunday became the first world
leader to be admitted to hospital for persistent symptoms of
COVID-19, the illness caused by the novel coronavirus.
This initially raised concerns about a leadership vacuum,
but Johnson's condition has gradually improved. The Canadian dollar CAD= , the Norwegian crown NOK= , and
the Russian ruble RUB= were all higher against the dollar for
the week, but further gains are in doubt.
Investors reacted negatively to the emerging supply-cut
agreement between members of OPEC and its allies by selling
crude futures, suggesting these cuts may not be enough to offset
an expected drop in global demand.