FOREX-Recovery hopes underpin risk currencies despite setback in pandemic fight

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

By Hideyuki Sano
TOKYO, June 23 (Reuters) - The U.S. dollar was on the
backfoot on Tuesday, while its Australian counterpart and other
risk-sensitive currencies stood firm as markets clung on to
hopes of an economic recovery from the pandemic despite rising
infections in some parts of the world.
Traders bought into riskier bets as some big cities in North
America, such as New York and Toronto, eased lockdowns and
reopened their economies, though that came against setbacks
elsewhere in fight to contain the coronavirus.
The World Health Organization (WHO) reported a record
increase in global novel coronavirus cases on Sunday, with
spikes in infections in southern and western U.S. states as well
as Brazil. "Market players have been bracing for the second wave for
some time and they are probably betting that it won't drag down
the economy too much because policymakers are reluctant to
impose lockdowns again," said Yukio Ishizuki, senior strategist
at Daiwa Securities.
The Australian dollar fetched $0.69245 AUD=D4 , up 0.25% in
early trade, building on the 1.08% gains made on Monday, also
helped by the recovery in commodity prices.
The currency enjoyed an additional boost on Monday when
Reserve Bank of Australia (RBA) Governor Philip Lowe said the
currency's recent rise was not a problem and the impact of the
pandemic would not be as bad as feared. Against a basket of currencies .DXY , the dollar was little
changed at 97.021 after a fall of 0.68% on Monday.
The offshore yuan traded at 7.0559 yuan per dollar CNH= ,
edging near two-month highs of 7.0400 hit last week.
European currencies also recovered after nearly two weeks of
retreat.
The euro jumped back to $1.12705 EUR= , about a cent above
Monday's low.
Sterling bounced back to $1.2489 GBP=D4 , up 0.14% so far
on the day, from Monday's three-week low of $1.2337.
Investors are now looking to European business activity
surveys due later in the day.
Economists expect the euro zone composite flash PMI to rise
to 42.4 in June from 31.9 last month as European economies
gradually reopen.
Emerging market currencies also ticked up with the MSCI
emerging market currency index .MIEM00000CUS rising near its
highest levels in a week.
The yen was little moved, stuck at 106.90 yen per dollar
JPY= .