FOREX-Dollar clings on to gains on fears of new COVID-19 cases, U.S.-Sino tensions

* Euro up slightly vs dollar, but most majors fall
* Nordic currencies rise vs dollar, euro
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds details, background, updates prices)
By Olga Cotaga
LONDON, May 12 (Reuters) - The U.S. dollar clung on to gains
on Tuesday on growing fears about a second wave of coronavirus
infections and after the Federal Reserve played down the
likelihood of negative U.S. interest rates, boosting the
currency's yield attraction.
Fed policymakers say they will do what it takes to cushion
an economy crushed by widespread lockdowns aimed at slowing the
spread of the coronavirus, but will likely stop short of cutting
interest rates to below zero.
New coronavirus infections have been found in China, South
Korea and Germany, where respective governments have eased
lockdown restrictions. A re-emergence of novel coronavirus cases could dent a
global economic recovery which was supposed to be propelled by
an injection of monetary and fiscal stimulus.
"While the numbers of cases was relatively small, they do
play into market fears over the threat posed by a second wave of
COVID-19 infections and highlight the challenging path ahead for
the global economy," said Lee Hardman, currency analyst at MUFG.
The euro was last up slightly against the U.S. currency at
$1.0818 EUR=EBS , though still not too far from the $1.0636 low
touched at the end of March when the pandemic sent markets into
turmoil.
Other majors nursed losses, except the yen which increased
by 0.1% to 107.55 versus the dollar JPY=EBS . The Australian
dollar AUD=D3 was the biggest mover in Asian trading, dipping
to a five-day low of 0.6432 after China banned some Australian
meat imports. It later pared losses as Australia's trade
minister played down the issue as a technicality.
The Nordic currencies rose, however, with the Norwegian
crown NOK=D3 last up 0.5% at 10.2440.
Richard Falkenhäll, senior FX strategist at SEB, said
investors were anticipating Norges Bank buying more crowns going
forward as the country looks to widen its fiscal deficit,
supporting it with capital from the government's oil fund.
Norway will sharply raise spending this year from its
trillion-dollar sovereign wealth fund, the government said on
Tuesday, exceeding a self-imposed cap for the first time in over
a decade to aid an economy reeling from the coronavirus crisis.
As the fund is denominated in foreign currency, this would
lead to more crown buying, Falkenhäll said, adding SEB expects
the central bank to increase purchases to 2.2 billion crowns a
day from the current 2.1 billion.
The Swedish crown SEK=D3 followed suit, rising 0.4% to
9.8205.
The greenback overall was supported by the possibility of
U.S. President Donald Trump instructing a federal pension fund
not to buy Chinese equities, making investors cautious on
U.S.-Sino relations.
The White House on Monday named three nominees to sit on a
board that oversees federal employee pension funds, a move that
could see the reversal of a decision to allow one of the funds
to invest in Chinese companies under scrutiny from Washington.
Trump also said he opposed re-opening "Phase 1" trade
negotiations after China's state-run Global Times floated the
idea on Monday.
Traders will be looking for Fed Chairman Jerome Powell's
speech on current economic issues on Wednesday, during which he
will be scrutinised on his views about the future of the
monetary policy.

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Euro steady vs dollar but close to March low IMAGE https://tmsnrt.rs/2WpJ9uM
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