FOREX-Dollar steadies, yen gains; European economic data in focus

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

LONDON, July 1 (Reuters) - Currency traders were broadly
cautious in early London trading on Wednesday, with the Japanese
yen seeing its first session of gains in more than a week,
before key European and U.S. economic data.
The dollar rose overnight before erasing gains, ahead of
U.S. manufacturing data for June, which is expected to show a
rebound in activity. The dollar was up around 0.2% on the day at
97.407 against a basket of currencies at 0732 GMT =USD ,
"Even if surprising on the upside, markets are likely to
take the forward-looking indicator with caution given the rising
Covid-19 cases in the US," ING wrote strategists in a note to
clients.
European economic data was also in focus, with eurozone
manufacturing PMI due at 0800 GMT, and German unemployment data
at 0755 GMT.
The euro was broadly flat on the day, at $1.12275 EUR=EBS .
"In line with the generally calmer trend in FX markets,
EUR/USD should stay around 1.1200 today," ING strategists said.
Investors have been betting that the surge in new infections
in the U.S. south and southwest will not derail a broader global
economic recovery.
But new U.S. COVID-19 cases rose by more than 47,000 on
Tuesday, according to a Reuters tally, the biggest one-day spike
since the start of the pandemic, as the government's top
infectious disease expert said that number could soon double.
The European Union has excluded the United States from its
initial "safe list" of countries from which the bloc will allow
non-essential travel from Wednesday. A localised lockdown of more than 300,000 people in the
suburbs north of Melbourne in Australia will start for a month
on Wednesday, after two weeks of double-digit rises in new
coronavirus cases in Australia's second most populous state.
The Japanese yen rose around 0.3% versus the dollar, to
107.635, its first session of significant gains in more than a
week JPY=EBS .
The riskier Australian and New Zealand dollars fell in
overnight trading before recovering in early London trading.
Versus the dollar, the Aussie was at 0.6908 and the kiwi at
0.6458 AUD=D3 NZD=D3 .
Geopolitical tensions also contributed to investor caution,
and China made the first arrest under new national security law
which limits the freedom and autonomy of Hong Kong. The United States and its Asian and Western allies
criticised the authoritarian legislation. Washington said it
would continue to take strong action against China. The Swedish crown was broadly flat after the Riksbank kept
rates unchanged 0%. After a spike in March, the crown recovered to its
pre-coronavirus levels at the start of May and has been broadly
stable since. Versus the euro, it was at 10.466 on Wednesday,
down around 0.1% on the day EURSEK=D3 .
"SEK is clearly the market's favourite amongst the Nordic
currencies," wrote Antje Praefcke, Commerzbank FX strategist, in
a note to clients. "NOK is suffering as a result of the double
burden caused by the low oil price and the corona lockdown,
whereas SEK is benefitting from the Swedish government's and
central bank's diverse approach."
Versus the euro, the Norwegian crown rose around 0.3% to a
one-week high of 10.7785 EURNOK=D3 .