FOREX-Dollar extends losses with focus on U.S. coronavirus cases

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Updates throughout, adds chart, adds comment)
By Elizabeth Howcroft
LONDON, June 29 (Reuters) - The dollar fell on Monday while
the euro led gains by strengthening half a percent, though
currency markets lacked clear direction as surging coronavirus
cases kept economic optimism in check.
The global death toll from COVID-19 reached half a million
on Sunday, according to a Reuters tally. Cases surged in
Southern and Western U.S. states, prompting California to order
some bars to close in the first major rollback of efforts to
reopen the economy. Elsewhere, profits at China's industrial firms rose for the
first time in six months in May, suggesting the country's
economic recovery is gaining traction - but the news did little
to support oil prices. The dollar fell against a basket of currencies in the Asia
session, recovered briefly in early London trading, before
extending falls, down 0.3% at 97.19 at 1015 GMT =USD .
Having fallen more than 1% this month, the dollar is on
track for its biggest monthly loss since December 2019.
ING strategists told clients the dollar could be supported
by month-end portfolio rebalancing on Tuesday.
"While a quiet data calendar today could see DXY drift down
to the 96.80/97.00 area, we'd probably say much follow-through
DXY selling beyond those levels looks unlikely," they said.
There were some signs of investor caution: the Japanese yen
was flat on the day, at 107.190 JPY=EBS , while the safe Swiss
franc gained around 0.3% against the dollar, at 0.9449 at 1010
GMT CHF=EBS .
But the risky Australian dollar strengthened overnight even
after the country reported its biggest one-day rise in new
coronavirus infections in more than two months. It eased off in early London trading on Monday, up 0.2% on
the day at 0.6877 AUD=D3 . The New Zealand dollar was also up
0.2% at 0.6436 NZD=D3 .
The euro rose 0.6% - its biggest daily jump in a week -
reaching as much as $1.128, also rising against the pound, Swiss
franc and yen, even though European shares opened lower
EUR=EBS EURGBP=D3 EURCHF=EBS EURJPY=EBS . Having touched a one-month low of 1.0628 on Friday,
euro-Swiss was up 0.2% at 1.06545 EURCHF=D3 .
"The longer the euro can remain in the current 1.1160-1.14
range, the more positive the longer-term outlook," Kit Juckes,
head of FX strategy at Societe Generale, wrote to clients.
French President Emmanuel Macron and German Chancellor
Angela Merkel will meet on Monday to discuss the planned
European Union coronavirus recovery fund. Spanish Foreign Minister Arancha Gonzalez Laya said the EU
is also expected to have a list of COVID-19-safe countries for
travel purposes ready by Tuesday at the latest. The recovery of economic sentiment in the euro zone
intensified in June after a modest pick-up in May, European
Commission data showed on Monday. Goldman Sachs FX strategists wrote in a note to clients last
week that they expect a sustained recovery in the global economy
to support euro appreciation over the coming months.
"But at least at this stage we would not recommend EUR/USD
longs for investors seeking risk-negative dollar shorts - for
which the yen remains the best option, in our view," they added.
Traders were keeping an eye on further U.S. reaction to the
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