* Greenback sinks to lowest since mid-2018 against offshore
yuan
* Sterling steadies above $1.33 as Brussels dinner looms
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Kevin Buckland and Tom Westbrook
TOKYO/SINGAPORE, Dec 9 (Reuters) - The dollar slipped in
Asia on Wednesday as signs of progress in beating back the
COVID-19 pandemic sapped demand for the safest assets, while the
pound was on tenterhooks ahead of a leaders meeting to try and
salvage a Brexit trade deal.
The U.S. currency declined against most of its major peers
as Britain began mass vaccinations and the U.S. edged closer to
more fiscal stimulus. It slipped about 0.4% against the
risk-sensitive Aussie AUD=D3 and fell to a 2-1/2 year low
against the yuan.
Sterling steadied above recent lows before a Wednesday
dinner between British Prime Minister Boris Johnson and European
Commission President Ursula von der Leyen in Brussels that is
seen as a last roll of the dice for a Brexit trade
deal. Against a basket of currencies =USD , the dollar was 0.1%
lower at 90.816, less than half a percent above a
two-and-a-half-year trough it hit on Friday.
It slipped about 0.2% against the euro EUR= to $1.2126 and
0.3% and is tracking toward an annual loss of more than 7.5%
against the common currency, its largest since 2017, as
investors figure on low rates keeping it under pressure for a
while yet.
The dollar dropped to 6.4975 yuan in offshore trade CNH=
and 6.5229 onshore CNY= , which puts the yuan up by more than
10% from its May lows, boosted by the softer dollar and steady
inflows into Chinese stocks and bonds. CNY/
"We expect dollar weakness and the risk positivity to
continue into next year," said Craig Chan, head of global FX
strategy at Nomura, on an outlook call with journalists.
He forecasts the euro to hit $1.28 and the yuan to reach
6.2500 per dollar by the end of next year.
DINNER DATE
Sterling GBP= , which has whipsawed while trade
negotiations are deadlocked, steadied against the weaker dollar
but remained on edge going in to the leaders' meeting. GBP/
Britain faces a chaotic split from the European Union if no
trade deal can be struck by the end of the year because Brexit
transition arrangements would expire without measures to protect
about $1 trillion in annual trade from tariffs and quotas.
Volatility gauges for the pound have soared to reflect what
traders reckon is a wild ride ahead. One-week sterling implied
volatility GBPSWO= hit a fresh eight-month high on Wednesday
and the premium of puts to calls GBP1MRR= is elevated.
"Put a gun to my head and I'd be a buyer of sterling, as I
see the risk skewed that Boris would come back with some sort of
agreement," said Chris Weston at Melbourne broker Pepperstone,
though he added rewards for such a bet might be limited.
"Broad positioning is short sterling, but not at extremes by
any means. This limits the prospect we get an exaggerated
short-covering rally to say $1.3800 or $1.4000."
Meanwhile, Britain began the world's first mass COVID-19
vaccination on Tuesday, the same day that President-elect Joe
Biden pledged to vaccinate 100 million Americans after taking
office. Both moves supported markets' confidence. Investors are also tracking negotiations over U.S.
coronavirus aid, with the Trump administration proposing a $916
billion package on Tuesday after congressional Democrats
rejected a slimmer plan. The Japanese yen JPY= was little changed at 104.14 per
greenback, but J.P. Morgan sees a break of the psychologically
key 100 level as only a matter of time with the U.S. Federal
Reserve maintaining ultra-easy monetary conditions. [JPY/}
"When the Fed has the policy rate at zero, the dollar tends
to weaken against the yen in a risk-on environment," said Tohru
Sasaki, the bank's head of Japan market research in Tokyo.
"Dollar-yen is getting heavier and heavier."
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Currency bid prices at 1:31PM in Singapore (0531 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2127 $1.2104 +0.19% +8.17% +1.2130 +1.2102
Dollar/Yen JPY=D3 104.1400 104.1600 +0.00% -4.10% +104.1650 +104.1350
Euro/Yen EURJPY= 126.29 126.07 +0.17% +3.56% +126.3100 +126.0600
Dollar/Swiss CHF=EBS 0.8880 0.8890 -0.11% -8.23% +0.8890 +0.8880
Sterling/Dollar GBP=D3 1.3374 1.3359 +0.13% +0.85% +1.3380 +1.3354
Dollar/Canadian CAD=D3 1.2799 1.2821 -0.16% -1.47% +1.2819 +1.2799
Aussie/Dollar AUD=D3 0.7439 0.7410 +0.40% +6.03% +0.7444 +0.7405
NZ NZD=D3 0.7063 0.7044 +0.27% +4.96% +0.7066 +0.7036
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX
+0.7036