FOREX-Dollar set for weekly gains as geopolitical tensions simmer

* Small weekly rise would be dollar's best since May
* Euro stable ahead of EU Summit
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Julien Ponthus
LONDON, June 19 (Reuters) - Mounting geopolitical tensions
and fears that a second wave of COVID-19 cases could stymie a
swift economic recovery set the dollar on track for its best
weekly gain in a month on Friday.
The world's reserve currency, which was flat in European
morning trade, has gained about 0.3% this week against a basket
of currencies =USD , its best performance since mid-May.
Tensions remain high between China and India despite the
two Asian nuclear powers agreeing to make efforts to de-escalate
their confrontation in the western Himalayas.
U.S. President Donald Trump, meanwhile, renewed his threat
to cut ties with China, a day after the first high-level talks
between the countries in months.
Adding to nervousness, Australian Prime Minister Scott
Morrison said that a "sophisticated state-based actor" has been
attempting to hack a wide range of Australian organisations for
months and had stepped up its efforts recently.
The Australian dollar AUD=D3 , which has soared by almost
25% from March lows, was up 0.3% at $0.6875.
Traders were switching their attention to a European Union
summit at which bloc leaders will try to navigate regional
divisions over a 750 billion euro ($840.8 billion) coronavirus
recovery fund. The euro EUR= was flat $1.1207, having lost about 1%
against the dollar since Tuesday on doubts over whether the plan
can be realised.
Markets have also been focused on an uptick in coronavirus
cases in many U.S. states this week and new infections detected
in Beijing, raising fears of a return to global lockdowns.
"Even if we do not see a 'second wave', a renewed rise in
infection numbers illustrates that things are not going to
return to normal for a long time," Commerzbank analysts said in
their morning note.
Elsewhere, the British pound GBP=D3 was flat at $1.2433
after data showed that British retail sales rebounded more
strongly than expected last month and that public borrowing hit
a record high as debt exceeded economic output. Trade talks with the EU were also in the spotlight.
French Junior European Affairs Minister Amelie de Montchalin
on Friday said that she could not rule out Brexit talks ending
without a deal, adding that it remains in Britain's interests to
reach an agreement.
($1 = 0.8921 euros)