FOREX-Dollar set for biggest drop in 3 weeks as U.S. infection cases jump

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

By Saikat Chatterjee
LONDON, June 26 (Reuters) - The greenback steadied on Friday
but was set for its biggest weekly drop in three weeks as
caution over growing coronavirus infections cast doubt over the
U.S. economic outlook while a bounce in stocks pushed the kiwi
dollar higher.
Though an easing in European lockdown rules bodes well for
sentiment in the region, headlines from other major economies
weighed on sentiment.
The governor of Texas temporarily halted the state's
reopening on Thursday as COVID-19 infections and
hospitalizations surged. Texas, at the forefront of efforts to
reopen devastated economies shut down by the pandemic, has seen
one of the biggest jumps in new cases. With markets undecided between hopes of a quick economic
recovery and fears of a second wave of infections, investors
focused on the dovish minutes by the European Central Bank this
week to keep its stimulus policies in place for a while.
The euro zone is "probably past" the worst of the economic
crisis caused by the coronavirus pandemic, European Central Bank
President Christine Lagarde said on Friday, while urging
authorities to prepare for a possible second wave. The euro EUR=EBS edged 0.1% higher versus the dollar and
was set for its biggest rise in three weeks. Against its other
European rivals such as the Norwegian crown and the Swedish
currency it rose as much as 0.2% each.
The New Zealand dollar NZD=D3 led currency gainers as
encouraging recent data prompted investors to add risk positions
despite the surge in infection rates.
"Stock prices remained supported but I doubt they could
retain the current high valuations when more earnings results
will come in next month," said Tatsuya Chiba, manager of forex
at Mitsubishi Trust Bank.
"At this point, risk currencies could slip again versus the
yen."
Elsewhere, the Australian dollar fetched $0.6888 AUD=D4 ,
stuck in its rough $0.68-0.70 range in the past couple of weeks.