* Greenback set 0.6% weekly gain this week
* Aussie dollar, New Zealand dollar is not doing well in May
* Sterling declines, reflecting concerns from the Brexit transition
* Graphics: World exchange rates in 2019 tmsnrt.rs/2egbfVh (Update Rates)
By Olga Cotaga
LONDON, May 15 (Reuters) – The dollar was set for a small weekly gain on Friday, and the Australian dollar to fall by more than 1% weekly as the threat of another wave of coronavirus infections rattled investors.
Total cases in Germany increased by 913 to 173,152 on Thursday, and the death toll increased by 101 to 7,824 after the country facilitated a nationwide recovery.
New infections were recorded in other countries that have eased public sector restrictions, preventing past investor optimism so that economies could return to normal soon.
As hopes disappeared for a rapid global recovery from the pandemic, traders unleashed the trade-sensitive Aussie and moved into safer assets such as the dollar.
“The risk is clear that the opening of economies takes longer to materialize than what the markets discount,” said Carl Hammer, head of macro and FICC research at SEB.
The euro was last neutral versus the dollar at $ 1.0799. The single currency held its ground after German economic output rose by 2.2% in the first quarter, as market participants expected.
Germany slipped into recession after suffering its toughest quarterly contraction since the 2009 financial crisis, when stores and factories closed in mid-March, preliminary data showed Friday.
In addition, the euro area economy experienced its deepest decline on record in the first three months of the year compared to the previous quarter.
“Data published since the first estimate has generally been weaker than expected, and we see a risk that the first estimates will be revised down for several countries,” said SEB’s Hammer.
Kit Juckes, macro strategist at Societe Generale, said the euro / dollar “is already too weak to fall rapidly”. The single currency had fallen to $ 1.0636 in March during the coronavirus-induced market route and is now trading not far from that level.
The dollar rose 0.1% against a basket of currencies of 100.43, although it expected a 0.6% gain this week on rising Sino-U.S. tensions.
U.S. President Donald Trump signaled a further deterioration of his relationship with China in the outbreak of coronavirus, saying he had no interest in talking to President Xi Jinping right now and going so far as to suggest he could even cut ties to the world’s second largest economy.
The Australian dollar and the New Zealand dollar both fell 0.6% to 0.6428 and 0.5956 respectively. The Australian dollar was on course for a 1.4% decline since Monday.
Like other majors, the antipodean couple struggled for traction in May, as investors and authorities weigh the optimism to ease containment measures against the risk of multiple infections and the large scale of financial damage already done.
The yen rose 0.2% at 106.99 per share. Dollar, but has been lower this week as the U.S. Federal Reserve officials said the prospect of negative rates, which also curbed the dollar.
Elsewhere, the British pound remained under pressure, falling 0.6% to $ 1.2155, its lowest since March 27, after EU Brexit negotiator Michel Barnier said on Friday that the third round of talks with Britain on a new partnership was “disappointing” “.
The Swedish krone fell on both the dollar and the euro on Friday, but SEB estimated that foreign exchange trading at trade weight was now at a stronger level than before the start of the COVID-19 crisis. The krone was last down 0.8% at 9.8850 against the dollar and at 10.67320 against the euro.
The Norwegian krone fell 1% to 11.0760 against the euro after Finance Minister Jan Tore Sanner said Norway’s current level of public spending to protect the economy was unsustainable over time.
Reporting from Olga Cotaga
Editing by Larry King, Mark Heinrich and Nick Macfie