FOREX-Dollar set for 0.6% weekly gain amid worries about recovery

* Greenback set for 0.6% weekly gain this week
* Aussie dollar, New Zealand dollar not doing well in May
* Sterling falls, reflecting Brexit transition worries
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Updates rates)
By Olga Cotaga
LONDON, May 15 (Reuters) - The dollar was set for a small
weekly gain on Friday and the Australian dollar for a more than
1% weekly drop as the threat of a second wave of coronavirus
infections rattled investors.
Total cases in Germany increased by 913 to 173,152 on
Thursday and the death toll rose by 101 to 7,824 after the
country eased a nationwide lockdown. New infections were recorded in other countries which have
eased restrictions on public life, denting earlier investor
optimism that economies could get back to close to normal soon.
As hopes faded for a quick global recovery from the
pandemic, traders unloaded the trade-sensitive Aussie and moved
into safer assets such as the dollar.
"The risk is clear that the opening of economies takes
longer to materialise vs what markets are discounting," said
Carl Hammer, head of macro and FICC research at SEB.
The euro was last neutral versus the dollar at $1.0799
EUR=EBS . The common currency held its ground after German
economic output contracted by 2.2% in the first quarter, as
market participants were expecting.
Germany slid into recession after suffering its steepest
quarterly contraction since the 2009 financial crisis as shops
and factories were shut down in mid-March, preliminary data
showed on Friday. Moreover, the euro zone economy experienced its deepest
contraction on record in the first three months of the year
against the previous quarter. "Data published since the first estimate has been generally
weaker than expected and we see a risk of the first estimates
being revised down for several countries," SEB's Hammer said.
Kit Juckes, macro strategist at Societe Generale, said that
euro/dollar "is too weak already to fall fast". The common
currency had fallen to $1.0636 in March during the coronavirus-
induced market rout and was now trading not far from that level.
The dollar was up 0.1% against a basket of currencies at
100.43 =USD , although set for a 0.6% gain for the week on
rising Sino-U.S. tensions.
U.S. President Donald Trump signalled a further
deterioration of his relationship with China over the
coronavirus outbreak, saying he had no interest in speaking to
President Xi Jinping right now and going so far as to suggest he
could even cut ties with the world's second-largest economy.
The Australian dollar AUD=D3 and the New Zealand dollar
NDZ=D3 both fell 0.6%, to 0.6428 and 0.5956 respectively. The
Aussie dollar was on course for a 1.4% decline since Monday.
The antipodean pair, like other majors, have struggled for
traction in May as investors and authorities weigh optimism
about easing containment measures against the risk of more
infections and the sheer scale of economic damage already done.
The yen JPY=EBS was up 0.2% at 106.99 per dollar, but has
been grinding lower this week as U.S. Federal Reserve officials
talked down the prospect of negative rates, also buoying the
dollar.
Elsewhere, the British pound GBP=D3 remained under
pressure, falling 0.6% to $1.2155, its lowest since March 27,
after the European Union's Brexit negotiator Michel Barnier said
on Friday that the third round of talks with Britain on a new
partnership was "disappointing". The Swedish crown fell on Friday both against the dollar and
the euro, but the SEB estimated that on a trade-weighted basis,
the currency was now at a stronger level then before the
COVID-19 crisis started. The crown was last down 0.8% at 9.8850
against the dollar SEK=D3 and at 10.67320 against the euro
EURSEK=D3 .
The Norwegian crown fell 1% to 11.0760 against the euro
EURNOK=D3 after Finance Minister Jan Tore Sanner said that
Norway's current level of public spending to shield the economy
was not sustainable over time. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Dollar set for weekly gains https://tmsnrt.rs/2WWCPdn
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>