REFILE-FOREX-Dollar gains as market risk sentiment sours

(Refiles to show dollar gained in headline; no change in text.)
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Iain Withers
LONDON, June 24 (Reuters) - The dollar regained some ground
on Wednesday after two straight days of losses, as money markets
tempered hopes of a rapid global economic recovery.
The U.S. currency gained more than 0.2% against a basket of
currencies =USD , as risk sentiment soured in early trading in
Europe. Selling pressure hit several major currencies, including
sterling, which was down more than a third of a percent. The
euro gave up some of the week's gains, falling nearly 0.2%.
EUR=EBS GBP=D3
The New Zealand dollar fell almost 1% after the country's
central bank said the balance of economic risks remains to the
downside and it is prepared to use additional monetary tools as
necessary. Analysts said caution was warranted given the risk of a
second wave of Covid-19 infections, despite improved economic
data, including the strongest rebound on record in German
business confidence, according to data on Wednesday.
"The risk of a second wave worldwide has not been banished
yet and can quickly push the FX market back into the old pattern
of `risk aversion is on the up, let's buy safe havens; i.e., the
dollar' – even under the assumption that the lockdowns imposed
in that case would probably be much less severe than the first
time round," Commerzbank analysts said in a note.
Despite losing ground, the dollar index is still up more
than 0.9% this week on the improving economic picture, with UK,
euro zone and U.S. data earlier in the week supporting riskier
currencies at the expense of the safe-haven dollar.
The International Monetary Fund will release revised global
growth projections in its World Economic Outlook update later on
Wednesday (13.00 GMT), giving traders a fresh idea of the extent
of the economic damage caused by the Covid-19 pandemic and the
likely pace of recovery.
The IMF's last forecasts in April predicted world GDP would
fall 3% in 2020.
Spiking coronavirus cases in the United States, Germany and
elsewhere are being closely watched.
"We expect over the coming couple of weeks as we get more
clarity on this, state governors will be in a better position to
decide how to proceed," RBC Capital Markets' chief U.S.
economist, Tom Porcelli, said of the U.S. cases.