* Aussie slips from 10-week peak
* Weak inflation keeps pressure on pound
* PMI data due from 0730 GMT eyed
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, May 21 (Reuters) - The dollar clawed back some of
the week's losses on Thursday, as investors brought a more
cautious tone to trade, while Sino-U.S. tensions and weak
economic indicators dampened the mood.
The Australian and New Zealand dollars gave back about half
of their overnight rises, as did the euro. The British pound was
pressured as soft inflation stoked more talk of negative rates.
The risk-sensitive Aussie NZD=D3 was last at $0.6561,
nearly 1% under the 10-week peak it hit on Tuesday. The kiwi
NZD=D3 was about 0.6% below its Tuesday top at $0.6124. AUD/
"The Aussie has been tracking sentiment pretty closely, and
today's move lower in S&P futures is being reflected in the
Aussie, which is a reflection of the broader dynamic," said
National Australia Bank currency strategist Rodrigo Catril.
"On one side equity markets are pricing in positive news and
looking through to the recovery (from coronavirus) and on the
other side there is a pull down from the Chinese-U.S. tensions."
U.S. stock futures ESc1 fell by about the same margin as
the Aussie. The euro EUR= edged 0.2% lower to $1.0963 and the
Japanese yen JPY= was steady at 107.64 per dollar.
Diplomatic relations between the world's two biggest
economies have soured in recent weeks with U.S. President Donald
Trump attacking Beijing's handling of the coronavirus outbreak.
Trade tensions have also flared between China and Australia
over Australia's leading role in the push for a global inquiry
into the origins and spread of the pandemic.
The latest salvo came when Trump took to Twitter late on
Wednesday to accuse China of a "massive disinformation campaign"
seeking to damage his re-election chances, "so they can continue
to rip-off the United States."
There was no immediate response from China. However the
morning's yuan fixing was slightly firmer than expected, perhaps
a hint that authorities are prepared to prop up the currency as
China begins a key parliamentary meeting on Friday that may
yield more stimulus.
In any case, the dollar rose 0.2% against the yuan in
onshore trade CNY= to 7.1031. Against a basket of currencies
=USD the greenback rose 0.2% to 99.328 on Thursday.
CLOUDS AHEAD
Plenty of broader positivity remains, with yuan, Aussie,
kiwi and euro remaining ahead of the dollar for the week.
The next test are purchasing managers surveys due in Europe,
Britain and the United States through the day from 0730 GMT -
and they land amidst bad news elsewhere.
The World Health Organization reported the largest
single-day jump in coronavirus infections overnight as global
case numbers approach 5 million. Japan reported its steepest drop in exports in more than a
decade and cratering factory activity. A fifth of firms there worry they don't have enough cash to
ride out a prolonged crisis, a Reuters poll found. In Britain, weak inflation is driving bets the Bank of
England (BOE) may cut interest rates below zero. The pound GBP= was under pressure against the greenback,
slipping 0.3% to $1.2198, and fell to a two-week low of 89.88
pence per euro EURGBP= .
"The negative view we previously held for the kiwi on the
back of a dovish Reserve Bank can now be extended to the pound
and the BOE," said Terence Wu, FX strategist at Singapore's OCBC
Bank.
"For now, with the soggy dollar protecting cable downside,
we prefer to express this view through a higher euro/sterling."
(Editing by Sam Holmes and Jacqueline Wong)