FOREX-Dollar gains as risk-taking appetite wanes

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Julien Ponthus
LONDON, May 21 (Reuters) - The dollar edged higher on
Thursday as Sino-U.S. tensions and weak economic indicators in
Europe dented sentiment after hopes of a quick economic recovery
and further stimulus fuelled an overnight rally on Wall Street.
Against a basket of currencies =USD the greenback rose
0.2% to 99.40 while U.S. stock futures ESc1 were trading in
the red.
The euro EUR= eased down 0.1% to $1.0972, giving up some
gains secured after a Franco-German proposal for a pan-European
Union fund propped up hopes the bloc could move closer to a
fiscal union.
Stock markets across Europe opened in negative territory
while shortly after the bell, data showed that France's business
slump eased not quite as much as expected in May. Shortly after that, an indicator which tracks the
manufacturing and services sectors showed that Germany's
recession eased in May but also less than anticipated.
"The rate of decline in activity has eased considerably
since the peak of virus containment measures in April, but we
are still a long way off business as usual and the path to
recovery remains unclear," IHS Markit economist Phil Smith said.
In Britain, weak inflation is driving bets that the Bank of
England may cut interest rates below zero. The pound GBP=D3 remains under pressure against the
greenback, slipping 0.3% to $1.2201, as well as against the
euro, with a 0.3% fall at 89.90 pence per euro EURGBP= .
Japan reported its steepest drop in exports in more than a
decade and cratering factory activity. The Japanese yen JPY=
was down 0.3% at 107.800 per dollar. The risk-sensitive Aussie AUD=D3 was last at $0.6568 down
0.4%.
The dollar also rose 0.1% against the yuan in onshore trade
CNY= to 7.0973.
Diplomatic relations between the world's two biggest
economies have soured in recent weeks with U.S. President Donald
Trump attacking China's handling of the coronavirus outbreak.
The latest salvo came when Trump took to Twitter late on
Wednesday to accuse China of a "massive disinformation campaign"
seeking to damage his re-election chances, "so they can continue
to rip-off the United States."