* Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E
* Oil turmoil rattles FX market
* Coronavirus threatens global energy demand
* Euro looks to policymakers for fiscal response
By Stanley White
TOKYO, April 23 (Reuters) - The dollar erased gains and fell against the currencies of oil producers on Thursday, as a rebound in crude prices after an unprecedented collapse helped to calm markets unnerved by the massive coronavirus-led drop in global demand.
The euro held steady against the greenback and the pound ahead of a meeting of European Union officials on the bloc’s response to the economic turmoil caused by the global coronavirus pandemic.
It may take EU countries until the summer or even longer to agree on how exactly to finance aid to help economies recover as major disagreements persist, a bloc official said on Wednesday.
The greenback initially shrugged off the rebound in oil prices because the gains were slight. However, the dollar lost strength as oil futures extended gains, which decreases the safe-haven appeal of holding funds in dollars.
“The dollar-oil trade meant that the dollar rose when commodities fell, but this dynamic is starting to not work,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities in Tokyo.
“The dollar is not strong against other currencies. This shows that the foreign exchange market, at least, is starting to stabilise.”
Against the Norwegian crown, the U.S. currency gave up gains to fall 0.7% to 10.6894 as oil prices rose, pulling back from a one-month high reached on Wednesday.
The greenback fell 0.8% to 75.38 Russian rubles on Thursday.
The U.S. dollar edged lower against the Canadian dollar to C$1.4134 following a 0.3% decline on Wednesday.
The greenback initially rose against the Mexican peso but then reversed course and fell to 24.3850, retreating from a two-week high.
U.S. West Texas Intermediate (WTI) futures rose 10.16% to $15.18 a barrel on Thursday. On Monday, front-month WTI futures plunged to a historic low to more than minus $37 as a glut of oil and dwindling capacity to store it sent oil prices into a tailspin.
Brent crude also rose 11.83% to $22.78 a barrel, bouncing back from its lowest level since June 1999.
These gains pale against persistent investor concerns about the collapse in demand for oil, as major economies have been brought to a virtual standstill with stay-at-home rules and severe restrictions on businesses and travel aimed at limiting the spread of the coronavirus.
Countries are running out of space to store the oil that they are not using, which could lead to further disruptions for commodities and other markets.
Officials from the EU will discuss the bloc’s response to the economic damage caused by the coronavirus later on Thursday.
However, markets are wary because it is uncertain how far EU governments will cooperate in financing the recovery from what is sure to be a deep recession.
Ahead of the outcome of the meeting, the euro held steady at $1.0828. Against the pound, the common currency was little changed at 87.62 pence.
The European Central Bank has agreed to accept junk bonds as collateral to allow banks to finance themselves at the ECB, which should be a positive factor for the euro, but investors are waiting for details on the fiscal response.
The dollar was little changed versus the yen as the pair remains stuck in a holding pattern.
The greenback last traded at 107.78 yen.
The Australian dollar recovered from an early decline to rise 0.23% to $0.6339 as the greenback weakened against other currencies linked to the global commodities trade.
The New Zealand dollar also rose 0.37% to $0.5979.
Editing by Shri Navaratnam and Jacqueline Wong