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FOREX-Dollar holds gains as investors temper COVID-19 vaccine enthusiasm

    * Dollar index up nearly 0.8% this week
    * Kiwi holds gains as investors trim bets on negative rates
    * Very slight risk-averse mood creeps in late in Asia trade
    * Graphic: World FX rates in 2020

    By Tom Westbrook
    SYDNEY, Nov 12 (Reuters) - The dollar held broad gains on
Thursday as investors tempered bullish expectations about a
COVID-19 vaccine, while the kiwi hovered at an almost 20-month
peak as the odds lengthened on New Zealand imposing negative
interest rates.
    The dollar index was steady through the Asia session
and has added about 0.8% this week, mainly thanks to heavy
selling in haven currencies such as the Swiss franc and Japanese
yen, and weakness in the euro as COVID-19 cases surge in Europe.
    Sterling also nursed losses as trade talks between
Britain and the European Union seemed set to drag on past yet
another deadline, raising the prospect that no trade deal is
reached before Brexit transition arrangements end on Dec. 31.
    The moves have put the brakes on a long a precipitous drop
for the world's reserve currency, which shed about 10% against a
basket of currencies between March and the announcement of
Pfizer's working COVID-19 vaccine on Monday.
    "I think we had a speculative market that was increasingly
comfortable being short U.S. dollars," said National Australia
Bank's head of foreign exchange strategy, Ray Attril.
    "Then we had the vaccine news and a big spike in U.S. bond
yields, which I think just acted as a little bit of a check on
unbridled U.S. dollar bearishness," he said.
    The yen, a popular vehicle for bets against the dollar is
now, at 105.28 per dollar, some 2% below an eight-month high it
hit against the greenback last week, when Joe Biden's lead in
the U.S. election spurred a wave of dollar selling.
    The euro, itself heavily loaded with short bets
against the dollar, was kept under $1.18 and also weighed by
Germany's economic advisers cutting 2021 growth projections.

    "On the relative macro front, Europe is still on a weaker
footing compared to U.S.," said OCBC Bank strategist Terence Wu,
who believes the dollar's decline is running out of steam.
    "We also view the resilience in the Australian dollar with
some skepticism, and look to turn short on the Aussie if there
are signs that equities are losing steam."  

    Resistance to the dollar's strength in the Antipodes has
been led by the kiwi, which added a whisker to
Wednesday's rise as the central bank's tone has traders less
convinced that negative rates are a sure thing anymore.
    Rates markets moved sharply across the curve to price longer
odds on that possibility on Wednesday, and yields inched higher
on Thursday as the kiwi hit an almost 20-month top of $0.6915.
    "Less stimulus is required than we thought in August, but
still a substantial amount of stimulus," RBNZ Assistant Governor
Christian Hawkesby told Bloomberg in an interview.
    ANZ Bank still thinks New Zealand rates head below zero in
August 2021, but said it's now "become a bit of a toss up" and
that it is clear that going negative is no longer urgent.
    A risk averse mood which spilled over from equity markets
through the Asia session kept a lid on further gains, though,
and pushed the Aussie down marginally to $0.7272.
    Along with the virus, U.S. President Donald Trump's refusal
to concede defeat in the election is also beginning to jangle
investor nerves.
    "Market participants appear to assume recounts and legal
challenges are the only avenues for President Trump to remain in
office," said Commonwealth Bank of Australia analyst Joe
    "However, there are other pathways," he said, such as
Republican state legislatures sending separate delegates to cast
electoral college votes in Trump's favour, or for "faithless
electors" to ignore the ballot box outcome.
    "We expect the dollar to jump sharply, by at least 5%, if
President Trump does find a way to stay in office."
    Currency bid prices at 3:44PM in Sydney (0444 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1774        $1.1779     -0.03%         +5.03%      +1.1787     +1.1772
 Dollar/Yen                   105.2650       105.6400    -0.35%         -3.08%      +105.4750   +105.2150
 Euro/Yen                     123.93         124.15      -0.18%         +1.63%      +124.2200   +123.9400
 Dollar/Swiss                 0.9161         0.9169      -0.09%         -5.33%      +0.9170     +0.9157
 Sterling/Dollar              1.3207         1.3223      -0.09%         -0.39%      +1.3227     +1.3211
 Dollar/Canadian              1.3075         1.3062      +0.11%         +0.66%      +1.3077     +1.3059
 Aussie/Dollar                0.7272         0.7281      -0.12%         +3.64%      +0.7293     +0.7272
 NZ                           0.6877         0.6883      -0.07%         +2.21%      +0.6914     +0.6877
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ 

 (Reporting by Tom Westbrook; Editing by Sam Holmes and Lincoln