FOREX-Dollar at two-month highs as resurgent coronavirus threatens economy

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Saikat Chatterjee
LONDON, Sept 24 (Reuters) - The U.S. dollar reached a
two-month high on Thursday as concern grew over the resilience
of an economic recovery in the United States and Europe amid a
second wave of coronavirus infections.
The dollar benefited from another spike in coronavirus cases
in Europe, which boosted its safe-haven appeal, while Federal
Reserve policymakers called on the U.S. government to provide
more fiscal support, fuelling a bout of selling in risky assets
overnight. Against a basket of six other currencies =USD , the dollar
edged up 0.1% to a two-month high at 94.50. It is up nearly 2%
so far this week as economic momentum shows signs of fading.
"Optimism on the recovery, optimism on the virus, and bets
on stimulus were keeping markets well bid, and on all three of
these issues, there has been a degree of disappointment this
month," said John Velis, an FX and macro strategist at BNY
Mellon.
Appetite for riskier assets soured after data on Wednesday
showed U.S. business activity slowed in September and new
restrictions to stem a surge in coronavirus infections in Europe
hit the services industry.
Some investors are watching the Australian and New Zealand
dollars, which have come under pressure on growing expectations
their central banks could deliver more monetary stimulus. A
decline in commodity prices is expected to increase downside
risks for both currencies.
The Aussie AUD=D3 fell 0.45% to $0.7042, near its weakest
since July 21.
U.S. Federal Reserve Vice Chair Richard Clarida said on
Wednesday that the U.S. economy remained in a "deep hole" of
joblessness and weak demand and called for more fiscal stimulus,
adding that policymakers "are not even going to begin thinking"
about raising interest rates until inflation hits 2%.
Other safe-haven currencies, including the Japanese yen
JPY=EBS and the Swiss franc CHF=EBS , also held firm.
The British pound GBP=D3 swung between gains and losses
but held above $1.27 before an announcement of Britain's plans
to protect jobs and employment later in the day.