FOREX-Dollar set for weekly loss; risk sentiment still buoyed by vaccine progress

* Dollar recovers overnight losses
* Aussie, euro, yen little changed
* Bitcoin nears three-year high
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Updates prices, adds comment)
By Elizabeth Howcroft
LONDON, Nov 20 (Reuters) - The dollar slipped against a
basket of currencies on Friday and was set to end the week on a
loss, while riskier currencies were set for weekly gains, buoyed
by improved risk appetite following COVID-19 vaccine progress
and Joe Biden's U.S. election victory.
The dollar's downward trend was interrupted late on Thursday
when U.S. Treasury Secretary Steven Mnuchin called an end to
some of the Federal Reserve's pandemic lending - news that also
saw the dollar edge up in early London trading.
The announcement curtailed optimism created by reports that
Republican and Democratic senators had agreed to resume talks on
another coronavirus stimulus package. But by midday GMT, the dollar had resumed falling, down 0.1%
on the day at 92.288 at 1203 GMT in a quiet day for currency
markets.
The dollar has fallen for eight out of the last 10 sessions,
as currency traders' appetite for risk increased. Pfizer Inc PFE.N said it had applied for emergency use
authorisation in the United States for its COVID-19 vaccine.
Pfizer and its German partner BioNTech SE 22UAy.DE on
Wednesday reported final trial results showing the vaccine was
95% effective, news that bolstered market sentiment. Kenneth Broux, FX strategist at Societe Generale, said that
while equity markets are more bullish on the one-year horizon,
for bond and currency markets it is the next 3-6 months that are
important, as central banks react to the economic fallout from
the second wave of COVID-19.
"We're waiting for Monday, for the PMIs in Europe and the
UK," he said. "We know what the direction of travel is but we
want to know what the speed of travel is."
The euro was flat against the dollar, at $1.18710 at 1213
GMT EUR=EBS , on track for a small weekly gain, which Broux
said was more a function of dollar weakness than euro strength.
European Union leaders clashed on Thursday over Hungary and
Poland vetoing the bloc's 1.8 trillion-euro ($2.14 trillion)
recovery plan but decided to allow more time for an agreement.
The euro was unaffected. "We are inclined to think a common solution will be
eventually found (in line with the prior examples of EU
disputes) taking away the hurdle for more EUR/USD upside in
2021, and noting the wider soft USD environment," wrote ING
strategists in a note to clients.
Commerzbank strategist You-Na Park-Heger wrote that "there
is simply a lack of new impulses at present to let EUR-USD break
out of the range of 1.16-1.19."
"Yes, there is still optimistic news regarding a possible
vaccine, but the euphoria about that question has eased
notably," she said, adding that the European Central Bank is
expected to increase stimulus in December.
The Australian dollar - seen as a liquid proxy for risk
appetite - is having its best month versus the U.S. dollar since
April, in terms of percentage change AUD=D3 .
At 1215 GMT, it was up 0.4% on the day at 0.73105 versus the
U.S. dollar AUD=D3 .
The New Zealand dollar hit new 2-year highs of 0.6949
NZD=D3 , helped by positive risk appetite. It also had been
boosted last week by traders reducing their expectations for
negative rates after the Reserve Bank of New Zealand upgraded
its estimate for GDP growth. The Japanese yen was down around 0.1% against the dollar, at
103.82 at 1219 GMT JPY=EBS .
U.S. President Donald Trump will meet with Republican
leaders from Michigan at the White house on Friday, as his
campaign pursues an increasingly desperate bid to overturn the
Nov. 3 election result. Elsewhere, Bitcoin came close to – but did not surpass – the
Wednesday's three-year high of $18,483 BTC=BTSP .

($1 = 0.8425 euros)

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