* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, June 26 (Reuters) - The euro gained on Friday and is
set for its biggest weekly rise in three weeks after the
European Central Bank reaffirmed its dovish stance in the
minutes of its policy meeting while the dollar struggled at U.S.
coronavirus infections surged.
Facing the biggest economic contraction in generations, ECB
policymakers at their June 4 meeting extended emergency bond
purchases until mid-2021 and increased them by 600 billion euros
to 1.35 trillion euros to help member states finance their
pandemic response. Reuters reported after the meeting that policymakers had
debated increases of 500 billion to 750 billion euros.
The cautious comments suggested an extension of the bond-
purchase plans and reinvestment programs is likely by the end of
the year, which may benefit the euro.
"What we have seen in the last 4-6 weeks has been a big
turnaround on the euro's sentiment and this will be very
supportive for the currency depending on the progress on the EU
recovery fund," said Chris Turner, ING's global head of markets.
He expects the euro to strengthen to $1.20 by end of the year.
Against the dollar, the euro rose 0.1% to $1.12395 and is on
track for its biggest weekly rise since the first week of June.
Bank of America Merrill Lynch's trading platforms and
broader positioning surveys indicate currency markets are long
euro/dollar, though positioning is not stretched.
The euro's gains and a surge of coronavirus infections in
the United States meant the dollar struggled to gain traction.
The governor of Texas temporarily halted the state's
reopening on Thursday as COVID-19 infections and
hospitalizations rose. Texas, at the forefront of efforts to
reopen after shutting down, has seen one of the biggest jumps in
new cases. Against a basket of other currencies, the dollar =USD
edged 0.1% lower to 97.251.
The New Zealand dollar NZD=D3 led gains as encouraging
recent data prompted investors to add risk positions, despite an
increase 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 $0.68-0.70 range in the past couple of weeks.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
G10 FX monthly https://tmsnrt.rs/384McNp
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>