FOREX-Dollar set for small weekly gain on safe-haven demand

(New throughout; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, June 19 (Reuters) - Fears of a second wave of
coronavirus infections have increased demand for safe-haven
assets, putting the U.S. dollar on track on Friday for its best
weekly gain in a month.
Markets this week have been focused on an uptick in
coronavirus cases in many U.S. states, as well as new infections
detected in Beijing, raising fears of a return to global
lockdowns. The world's reserve currency, which made small
advances in the North American session, has gained 0.51% this
week against a basket of currencies =USD , its best performance
since mid-May.
The dollar was up 0.18% near midday to 97.61, close to its
highest levels since June 2.
"With COVID-19 and how it relates to the economy, we know
that this thing is not going to go away and we're going to have
to learn how to cope with this. So with that comes a bit of risk
in the market," said Juan Perez, senior foreign exchange trader
and strategist at Tempus, Inc. "There was this belief that the
recovery would be strong economically, but there's hesitation
because it does seem like we have a lot of separation in terms
of states."
He added, however, that the enormous impact on the American
economy compared with the rest of the world would ultimately
weigh on the dollar, in spite of its safe-haven appeal.
The euro EUR= was slightly weaker, down 0.12% at $1.119,
as an EU summit, in which the bloc will seek to bridge regional
divisions over a 750 billion coronavirus recovery fund, got
underway. European Central Bank head Christine Lagarde told EU
leaders that their economy was in a "dramatic fall" and called
on the bloc to act to spearhead revival, diplomatic sources and
officials said. Sweden, Denmark, Austria and the Netherlands - the bloc's
so-called "frugal four" - say the proposed recovery fund is too
big and the allocation of money not sufficiently linked to the
pandemic.
"Hopes of a breakthrough on the recovery fund have been
managed downwards recently, and the signs are instead pointing
to an agreement no sooner than an as-yet unscheduled summit
meeting in July," Deutsche Banks analysts told clients in their
morning note.