FOREX-Dollar clings to two-month highs amid COVID-19 angst

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Euro zone business growth stalls
* UK economy loses momentum
* Response to second wave of virus rattles investors

By Julien Ponthus
LONDON, Sept 23 (Reuters) - The dollar clung to two-month
highs on Wednesday as positive U.S. economic data and concerns
about a second wave of coronavirus infections in Europe met weak
economic indicators.
Euro zone business growth ground to a halt in September,
raising fears that fresh restrictions to quell a resurgence in
coronavirus infections might put the economic recovery into
jeopardy.
In Britain, the economy also lost momentum, a business
survey showed, as consumer-facing sectors suffered, notably from
the end of a government subsidy to support restaurants.

Other data, such as the number of nights booked in Spanish
hotels falling by 64% last month, added to the pessimistic mood.
Commenting on the disappointing indicators, both in the UK
and the euro zone, Rupert Thompson, chief investment officer at
Kingswood, warned that a swift V-shaped recovery from now on was
unlikely.
"With this decline happening even before the latest
tightening of social distancing measures, these numbers
highlight the fact that the easiest and strongest part of the
economic recovery is now behind us", he said.
Traders in the pound and the euro are also worried that
Britain and the European Union will fail to agree a free trade
deal, which would cause additional economic strain.
The dollar index =USD , which measures the dollar against a
basket of six major currencies, rose to a high of 94.25, the
highest in two months, then limited its gains to around 94.
"At present the market is once again dominated by concerns
about a second wave of infections, above all in Europe, meaning
that the dollar is in demand again", Commerzbank analysts wrote
in a morning note.
The dollar is likely to continue to gain as the coronavirus
rattles sentiment in Europe, but uncertainty about this year's
U.S. presidential election means it could be prone to more
volatile swings.
The euro fell to a two-month low of $1.1671 EUR=D3 in
early morning trading, its lowest since July 27, then recouped
some losses and was stable against the dollar at 1107 GMT.
The pound GBP=D3 fell to $1.2692, its lowest since late
July, after British Prime Minister Boris Johnson introduced on
Tuesday new restrictions on business activity to combat a second
wave of the coronavirus.
Sterling took back some losses in late morning trading and
made its way back above $1.27. The dollar was stable against the Swiss franc CHF=EBS at
0.9203 after a 0.6% gain from Tuesday, when the dollar was
bolstered by data showing U.S. home sales surged to their
highest level in nearly 14 years in August.
The Australian dollar AUD=D3 fell to a six-week low of
$0.7116. The New Zealand dollar NZD=D3 lost 0.56% to $0.6597.