FOREX-Improved risk appetite keeps dollar depressed

* Dollar down on improved risk appetite
* Bitcoin shy of 2017 record
* Aussie, Kiwi dollars dip in European trade
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, Nov 25 (Reuters) - The dollar nursed losses on
Wednesday as progress in developing a novel coronavirus vaccine
and expectations for a fiscal boost from a new U.S. government
triggered a shift of funds from the greenback to riskier assets.
The U.S. currency teetered near a two-month low against the
Australian dollar and a two-year low against the New Zealand
dollar, both considered barometers of risk sentiment due to
their close ties with the global commodities trade.
Bitcoin, a cryptocurrency known for extreme volatility, also
traded near an all-time high, in a further sign that investors
are growing more comfortable taking on riskier positions.
The U.S. dollar is expected to continue to fall as progress
on a vaccine and the expected choice of former Federal Reserve
Chair Janet Yellen as the next U.S. Treasury secretary relieved
two big uncertainties for investors.
"From here, the Fed will prove a mere auxiliary to maximize
fiscal impact by ensuring cheap funding," said John Hardy, head
of FX strategy at Saxo Bank.
He said the Fed would do this by printing money and keeping
rates low across the yield curve.
"On that note, it makes sense to have a former Fed chair
helping to maximize that fiscal-monetary coordination under a
Biden administration. So the long-term implications of the
Yellen nomination are distinctly dollar negative," Hardy added.
Later today, investors will be focused on the minutes from
the Federal Reserve's latest meeting.
"We don't expect much surprise and see limited room for the
minutes to tame the dollar decline. If anything, the risks are
skewed to a possible surprise coming from hints at an expansion
in quantitative easing in December," said strategists at ING in
a note to clients.
The dollar stood at $1.1917 against the euro EUR=EBS on
Wednesday, close to a two-week low.
The British pound GDP=D3 bought $1.3365, close to its
highest in more than two months.
Against the yen JPY=D3 , the dollar held steady at 104.41.
Research suggesting that a COVID-19 vaccine could be
available before the end of the year has sent U.S. stocks
surging to record highs and reduced the appeal of holding the
dollar as a safe-harbour currency. Risk appetite has also improved after U.S. President Donald
Trump's administration began cooperating with the
President-elect Joe Biden's transition team, and after reports
that Yellen, an advocate of more fiscal spending, will take the
top job at the Treasury. The dollar index =USD , pitting the dollar against a basket
of six major currencies, was at 92.012 after falling 0.4% on
Tuesday. It was last down 0.1% on the day.
The onshore yuan CNY=CFXS rose to 6.5799 per dollar on
hopes for better Sino-U.S. ties under Biden. Other Asian
currencies also edged higher.
The Antipodean currencies, which benefited earlier as
investors unwound bets for additional monetary stimulus in both
countries, eased in early European trade.
Improving risk appetite means the Australian dollar's
AUD=D3 next target is its high of $0.7413 on Sept. 1.
The New Zealand dollar NZD=D3 , which has rallied 5.5% so
far this month, is trading just shy of its strongest since June
2018.
Bitcoin BTC=BTSP , the most popular cryptocurrency, climbed
to $19,221 just short of its record of $19,666 from December
2017.