* Aussie slips from 10-week peak
* Weak inflation keeps pressure on pound
* PMI data due from 0730 GMT eyed
* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, May 21 (Reuters) - The dollar clawed back some of the week’s losses on Thursday, as investors brought a more cautious tone to trade, while Sino-U.S. tensions and weak economic indicators dampened the mood.
The Australian and New Zealand dollars gave back about half of their overnight rises, as did the euro. The British pound was pressured as soft inflation stoked more talk of negative rates.
The risk-sensitive Aussie was last at $0.6561, nearly 1% under the 10-week peak it hit on Tuesday. The kiwi was about 0.6% below its Tuesday top at $0.6124.
“The Aussie has been tracking sentiment pretty closely, and today’s move lower in S&P futures is being reflected in the Aussie, which is a reflection of the broader dynamic,” said National Australia Bank currency strategist Rodrigo Catril.
“On one side equity markets are pricing in positive news and looking through to the recovery (from coronavirus) and on the other side there is a pull down from the Chinese-U.S. tensions.”
U.S. stock futures fell by about the same margin as the Aussie. The euro edged 0.2% lower to $1.0963 and the Japanese yen was steady at 107.64 per dollar.
Diplomatic relations between the world’s two biggest economies have soured in recent weeks with U.S. President Donald Trump attacking Beijing’s handling of the coronavirus outbreak.
Trade tensions have also flared between China and Australia over Australia’s leading role in the push for a global inquiry into the origins and spread of the pandemic.
The latest salvo came when Trump took to Twitter late on Wednesday to accuse China of a “massive disinformation campaign” seeking to damage his re-election chances, “so they can continue to rip-off the United States.”
There was no immediate response from China. However the morning’s yuan fixing was slightly firmer than expected, perhaps a hint that authorities are prepared to prop up the currency as China begins a key parliamentary meeting on Friday that may yield more stimulus.
In any case, the dollar rose 0.2% against the yuan in onshore trade to 7.1031. Against a basket of currencies the greenback rose 0.2% to 99.328 on Thursday.
Plenty of broader positivity remains, with yuan, Aussie, kiwi and euro remaining ahead of the dollar for the week.
The next test are purchasing managers surveys due in Europe, Britain and the United States through the day from 0730 GMT - and they land amidst bad news elsewhere.
The World Health Organization reported the largest single-day jump in coronavirus infections overnight as global case numbers approach 5 million.
Japan reported its steepest drop in exports in more than a decade and cratering factory activity.
A fifth of firms there worry they don’t have enough cash to ride out a prolonged crisis, a Reuters poll found.
In Britain, weak inflation is driving bets the Bank of England (BOE) may cut interest rates below zero.
The pound was under pressure against the greenback, slipping 0.3% to $1.2198, and fell to a two-week low of 89.88 pence per euro.
“The negative view we previously held for the kiwi on the back of a dovish Reserve Bank can now be extended to the pound and the BOE,” said Terence Wu, FX strategist at Singapore’s OCBC Bank.
“For now, with the soggy dollar protecting cable downside, we prefer to express this view through a higher euro/sterling.” (Editing by Sam Holmes and Jacqueline Wong)