* Investors eye Fed buying of corporate bonds
* WHO says some treatment could help COVID-19
* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
(New throughout, updates prices, market activity and comments; new byline, changes dateline; previous
LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 12 (Reuters) - The dollar fell on Tuesday as investor risk appetite rose, boosted by
continued U.S. Federal Reserve action to battle economic devastation caused by the pandemic as well as
potential treatments that the World Health Organization said seemed to be limiting the severity of the
COVID-19 respiratory disease.
Even a small hint of positive coronavirus news limits the dollar's appeal as a safe-haven currency,
though declines were kept in check by growing fears of a second wave of infections.
Earlier, renewed U.S.-China trade tensions supported the greenback.
"Everybody is feeling a little better right now. The risk sentiment pendulum has swung from negative
in Asia to currently positive," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in
Toronto.
There are several drivers for the dollar's move, he noted.
"The Fed buying corporate bond ETFs today is adding to the risk-on move," Bregar said.
The Fed on Tuesday starts its long-anticipated program to buy corporate bonds and the exchange traded
funds that track them.
Risk appetite also improved after WHO said some treatments appear to be limiting the severity or
length of the COVID-19 disease and that it was focusing on learning more about four or five of the most
promising ones.
That said, analysts said risk-taking has been limited by persistent concerns about the current global
health crisis.
New coronavirus infections have been found in China, South Korea and Germany, where respective
governments have eased lockdown restrictions.
A re-emergence of coronavirus cases could dent a global economic recovery on the back of an injection
of monetary and fiscal stimulus.
In midday trading, the dollar index was down 0.4% at 99.807.
The greenback was also broadly supported by the possibility of U.S. President Donald Trump
instructing a federal pension fund not to buy Chinese equities, making investors cautious on U.S.-Sino
relations.
The White House on Monday named three nominees to sit on a board that oversees federal employee
pension funds, raising the potential for the reversal of a decision to allow one of the funds to invest in
Chinese companies under scrutiny from Washington.
The euro was last up 0.6% against the U.S. currency at $1.0865, though still not too far
from the $1.0636 low touched at the end of March when the pandemic sent markets into turmoil.
The dollar, meanwhile, fell 0.3% against the yen to 107.30.
The Australian dollar fell earlier, dipping to a five-day low of US$ 0.6432 after China
banned some Australian meat imports. It later pared losses as Australia's trade minister played down the
issue as a technicality and was last trading up 0.3%.
It was last up 0.3% at US%0.6510.
Traders will be looking for Fed Chairman Jerome Powell's speech on current economic issues on
Wednesday, when his views on the future of the monetary policy will be scrutinised closely.
========================================================
Currency bid prices at 11:39AM (1539 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0865 $1.0806 +0.55% -3.08% +1.0884 +1.0785
Dollar/Yen JPY= 107.3000 107.6600 -0.33% -1.43% +107.6900 +107.2200
Euro/Yen EURJPY= 116.58 116.33 +0.21% -4.40% +116.8300 +115.9600
Dollar/Swiss CHF= 0.9678 0.9729 -0.52% +0.00% +0.9750 +0.9667
Sterling/Dollar GBP= 1.2305 1.2335 -0.24% -7.20% +1.2375 +1.2288
Dollar/Canadian CAD= 1.4003 1.4006 -0.02% +7.83% +1.4064 +1.3972
Australian/Doll AUD= 0.6510 0.6488 +0.34% -7.28% +0.6536 +0.6433
ar
Euro/Swiss EURCHF= 1.0515 1.0516 -0.01% -3.11% +1.0522 +1.0515
Euro/Sterling EURGBP= 0.8830 0.8759 +0.81% +4.45% +0.8833 +0.8758
NZ NZD= 0.6102 0.6079 +0.38% -9.41% +0.6122 +0.6043
Dollar/Dollar
Dollar/Norway NOK= 10.1654 10.2852 -1.16% +15.80% +10.3627 +10.1385
Euro/Norway EURNOK= 11.0441 11.1344 -0.81% +12.26% +11.1855 +11.0219
Dollar/Sweden SEK= 9.7392 9.8729 -0.84% +4.19% +9.9126 +9.7109
Euro/Sweden EURSEK= 10.5836 10.6732 -0.84% +1.09% +10.7100 +10.5606
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Cotaga in London and David Gregorio)
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