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

* Euro up slightly vs dollar, but most majors fall
* Aussie dollar, Swedish crown biggest fallers
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Olga Cotaga
LONDON, May 12 (Reuters) - The U.S. dollar clung 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 interest rates, boosting the currency's
yield attraction.
U.S. 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 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
$1.0820 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 0.2% to 107.47 versus the dollar JPY=EBS .
The Swedish crown fell the most, last down 0.4% to 9.83
against the dollar SEK=D3 , though 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
downplayed the issue as a technicality.
The greenback was also supported by the possibility of
President Donald Trump instructing a federal pension fund to not
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 Chinese state-run Global Times floated the
idea on Monday. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Euro steady vs dollar but close to March low IMAGE https://tmsnrt.rs/2WpJ9uM
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