FOREX-Dollar recovers some overnight losses; focus on U.S. coronavirus cases

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

LONDON, June 29 (Reuters) - The dollar reversed some of its
overnight losses in early London trading with the rising number
of coronavirus cases keeping the mood in check and fears of a
second wave of the pandemic taking the shine off improving
economic data.
The global death toll from COVID-19 reached half a million
on Sunday, according to a Reuters tally. Cases surged in
Southern and Western U.S. states, prompting California to order
some bars to close in the first major rollback of efforts to
reopen the economy. Elsewhere, profits at China's industrial firms rose for the
first time in six months in May, suggesting the country's
economic recovery is gaining traction - but the news did little
to support oil prices. With little clear direction across the FX market, the
safe-haven Japanese yen rose versus the dollar overnight before
changing tack JPY=EBS and riskier currencies also gained.
The Australian dollar was up 0.3% versus the U.S. dollar at
0.6884 AUD=D3 , even after the country reported its biggest
one-day rise in new coronavirus infections in more than two
months. The New Zealand dollar also rose 0.3% versus the U.S.
dollar, at 0.6683 NZD=D3 .
"The alarming spread of COVID could soon become evident in
consumer confidence data," wrote MUFG strategists Derek Halpenny
and Lee Hardman in a note to clients, adding that the
reimposition of restictions could start to impact consumer
discretionary stocks and trigger a clearer risk-off move.
Against a basket of currencies =USD , the dollar was at
97.303 at 0734 GMT, down -0.2% on the day and more than 1% this
month, on track for its biggest monthly fall since December.
ING strategists told clients the dollar could be supported
by month-end portfolio rebalancing on Tuesday.
"While a quiet data calendar today could see DXY drift down
to the 96.80/97.00 area, we'd probably say much follow-through
DXY selling beyond those levels looks unlikely," they wrote.
The euro rose 0.3% to 1.125 versus the U.S. dollar ahead of
eurozone confidence data due at 0900 GMT and German inflation
figures at 1200 GMT.
French President Emmanuel Macron and German Chancellor
Angela Merkel will meet on Monday to discuss the planned
European Union coronavirus recovery fund. Spanish Foreign Minister Arancha Gonzalez Laya said the EU
is also expected to have a list of COVID-19-safe countries for
travel purposes ready by Tuesday at the latest. "We continue to expect a sustained recovery in the global
economy, which should support our view for euro appreciation
over the coming months," Goldman Sachs FX strategists wrote in a
note to clients.
"But at least at this stage we would not recommend EUR/USD
longs for investors seeking risk-negative Dollar shorts - for
which the Yen remains the best option, in our view," they added.
The euro edged away from Friday's one-month low of 1.0628
versus the Swiss franc, up 0.2% at 1.0659 EURCHF=D3 .
Traders were keeping an eye on further U.S. reaction to the
national security law to be imposed on Hong Kong.