* Dollar index -0.1%, close to two-week low
* Chinese yuan breaks past 7/dollar as risk rally runs
* AUD, NZD edge ahead
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, July 7 (Reuters) - The dollar nursed losses on
Tuesday and riskier currencies added a fraction to galloping
gains, after better-than-expected U.S. services data provided
the latest boost to confidence in a worldwide economic recovery
from the COVID-19 pandemic.
Against a basket of currencies, the dollar huddled near a
two-week low. The Chinese yuan CNH= picked up where it left
off after soaring with runaway Chinese equities on Monday and
briefly broke past the 7 per dollar barrier. The Antipodean
currencies tagged along for the ride. CNY/ AUD/
The surge came after a front-page editorial in the China
Securities Journal, affiliated with state-run Xinhua, said
fundamentals laid the foundation for a "healthy bull market".
Data also showed U.S. service industry activity rebounded to
almost pre-pandemic levels last month, with the headline figure
of 57.1 well ahead of expectations around 50.2. "Keep buying forever," said Imre Speizer, FX analyst at
Westpac in Auckland, only half in jest as he forecast the New
Zealand dollar to tack on more than a cent over the next week or
so.
"The bigger picture is that economies are back to something
that looks like a V-shape again," he said. "And the U.S. dollar,
because it's a safe haven, goes down if sentiment is strong."
The kiwi
could reach $0.67 if sentiment holds. The Australian dollar
AUD=D3 was steady at $0.6976.
Both are making a renewed tilt at the top of the ranges they
have held for weeks, taking cues from ebullient stock markets.
"The worst is likely over, but a swift and steady recovery
cannot be taken as the base case," said Terence Wu, a strategist
at Singapore's OCBC Bank.
ROLL BACKS, NO ROLL OVER
The push higher in riskier currencies this week comes
despite the rapid spread of the coronavirus casting doubts over
the global recovery.
Florida's greater Miami area became the latest U.S. hot spot
to roll back its reopening, ordering all restaurant dining
closed on Monday as COVID-19 cases surged nationwide by the tens
of thousands and the U.S. death toll topped 130,000.
Australia shuts the border between its two most populous
states at one minute before midnight on Tuesday, as it attempts
to contain a coronavirus outbreak in the city of Melbourne.
But as central banks pump cash into the world's financial
system and data shows rebounds in activity from April and May
doldrums, the dollar's 50-day moving average has fallen below
its 200-day average - often a bad signal for the greenback.
The pattern has been followed by a period of dollar weakness
in eight out of nine instances since 1980, according to analysts
at Bank of America.
Ahead on Tuesday, the Reserve Bank of Australia meets at
0430 GMT and is expected to keep interest rates on hold at a
record low 0.25%.
"We expect the RBA to reiterate the Australian economy is
performing better than feared, and any move higher in the cash
rate is some years away," said Commonwealth Bank of Australia
analyst Joe Capurso.
"The main downside risks for AUD/USD are an escalation in
U.S.-China tensions and the risk partial lockdowns become more
widespread," he said, saying a fall to $0.6660 was possible.