FOREX-Dollar holds gains as coronavirus woes sap confidence

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Risk appetite wanes as virus cases grow
* Dollar gains slow yuan's rally
* Lockdown in Melbourne another negative for market
sentiment

By Stanley White
TOKYO, July 8 (Reuters) - The dollar held onto gains on
Wednesday as a resurgence of the coronavirus in the United
States and the return of lockdowns in some countries boosted
safe-haven demand for the U.S. currency.
Risk sentiment was also undermined after Federal Reserve
officials expressed concern that rising coronavirus cases could
harm economic growth just as stimulus measures start to expire.
On the day, traders will be looking to see whether the
dollar's overnight gains will slow a recent rally in the yuan
sparked by optimism about the outlook for Chinese equities.
"The mood changes day by day, but the dollar looks to be
supported for now as investors turn more cautious about the
virus," said Yukio Ishizuki, foreign exchange strategist at
Daiwa Securities.
"The Fed's comments on the economy sound sombre. There's
reason to worry because it is hard to see when the virus will be
brought under control."
The dollar traded at 107.58 yen JPY= in Asia following a
0.3% gain on Tuesday.
Against the euro, the dollar was quoted at $1.1274, also
holding to a 0.3% gain from the previous session.
The greenback bought 0.9426 Swiss franc CHF=EBS , little
changed on the day.
Sterling GBP=D3 changed hands at $1.2540 and was quoted at
89.88 pence per euro EURGBP=D3 .
The pound was near three-week highs against both the
greenback and the common currency after British Prime Minister
Boris Johnson reiterated his commitment to reaching an early
trade deal with the European Union.
However, some traders remain reluctant to buy the pound
because there is still a risk that trade talks could fail to
yield an agreement.
Equities weakened and U.S. Treasury yields edged lower as
the number of confirmed coronavirus cases in the United States
pushed past 3 million on Tuesday, according to a Reuters tally,
stoking fears that hospitals will be overwhelmed. The United States has the highest known numbers of
coronavirus cases and deaths in the world.
Adding to the cautious tone, three Fed officials expressed
concern that the surge in infections threatens to pinch consumer
spending and job gains just as some stimulus programmes are set
to expire.
One Fed policymaker pledged more support ahead from the U.S.
central bank. Some traders warn that the dollar could break out of its
range against the yen because currency options are set to expire
later Wednesday and Thursday.
The yuan, which rallied against the dollar this week, stood
at 7.0241 in offshore trade CNH=D3 , down from an almost
four-month high reached on Tuesday.
Investors will monitor the opening of onshore trade in the
yuan CNY=CFXS to see if it retreats further from its recent
rally.
The Australian dollar AUD=D3 bought $0.6945 following a
0.4% decline on Tuesday. Sentiment for the Aussie has taken a
hit after coronavirus lockdown measures were reimposed in
Australia's second biggest city of Melbourne on Tuesday.
The New Zealand dollar NZD=D3 was little changed at
$0.6553.