* GBP recoups plunge; leaders meeting in Brussels in focus
* Declining dollar pauses for breath as virus jitters
support
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Dec 8 (Reuters) - Sterling on Tuesday clung to
hopes of a meeting between British Prime Minister Boris Johnston
and European Commission President Ursula von der Leyen salvaging
a Brexit trade deal, while safe-harbour demand gave the dollar
support as U.S. virus cases rose.
The British currency GBP= was whipsawed as the prospects
of Britain and the European Union striking a last-minute deal
ebbed and flowed. It shed as much as 1.5% overnight before
recouping losses after the leaders' announced plans to meet in
Brussels.
On Tuesday, sterling was on edge but holding on at $1.3353
early in the Asia session, well above Monday's low of $1.3225.
Other majors had dipped a fraction against the U.S. dollar
overnight with a broadly risk-averse mood, though dollar gains
were muted as investors overwhelmingly consider it in a
downtrend.
The yen JPY= held steady at 104.10 per dollar after
inching a fraction higher on Monday and the euro EUR= was kept
firmly above $1.21.
The pound's rebound - albeit with little actual sign of
headway in Brexit negotiations - piles pressure on to the
leaders' meeting to deliver a compromise before Britain's trade
privileges with the European Union expire at the end of the
month. "The thought process is Boris is not going to Brussels to
come back without a deal," said Chris Weston, head of research
at Melbourne brokerage Pepperstone.
Failure to secure anything before Thursday's European Union
summit could push the pound back to $1.30, he said, but is
reckoning on joint concessions to get to an agreement.
"I'm quietly confident we get something tangible to work off
at this meeting, which could cause some of the short covering of
the no-deal hedges."
The premium of pound puts to calls GBP1MRR= has rocketed
to its highest levels since April, more than doubling over the
past two weeks, as traders hedge against a no-deal outcome.
Volatility gauges are also surging, with one-week implied
volatility for the pound GBPSWO= at its highest since March.
Against the euro, the pound touched a seven-week low
overnight, before recovering to sit at 90.70 pence per euro
EURGBP= .
Elsewhere, concern at surging coronavirus cases in the
United States tempered optimism about vaccinations and fiscal
support for the U.S. economy and provided a bid for dollars.
Against a basket of currencies =USD , the greenback edged
higher to 90.890, about half a percent above the
two-and-a-half-year low it plumbed on Friday. The Australian and
New Zealand dollars took a breather and parked near recent
peaks. AUD/
"Although we see the kiwi gradually grinding higher in time,
getting gains may be a struggle in the short term as global
events cast a shadow," ANZ Bank analysts said in a client note.
Anthony Fauci, the U.S. government's top infectious disease
expert, said mid January "can be a really dark time for us" if
gatherings over the forthcoming holiday season spur even greater
spread of the virus.
California has shut all but critical infrastructure and
retail operations in its worst-hit areas as U.S. COVID-19
infections are at their peak, with an average of 193,863 new
cases reported each day over the past week. The U.S. Congress will vote this week on a stopgap funding
bill to provide more time for lawmakers to reach a deal on a
bigger COVID-19 relief package.
That could renew dollar selling by improving investors'
appetite for riskier currencies, but after so many false dawns
on the stimulus front traders were content to wait and see.
Later on Tuesday business sentiment surveys in Germany and
the United States are due and will offer some sense of how
deeply the latest wave of COVID-19 has hurt consumers' mood.
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Currency bid prices at 8:40AM in Singapore (0040 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2109 $1.2109 +0.00% +8.01% +1.2114 +1.2106
Dollar/Yen JPY=D3 104.0200 104.0700 +0.00% -4.19% +104.0450 +0.0000
Euro/Yen EURJPY= 125.95 125.99 -0.03% +3.28% +126.0300 +125.8700
Dollar/Swiss CHF=EBS 0.8909 0.8909 -0.12% -8.05% +0.8910 +0.8898
Sterling/Dollar GBP=D3 1.3347 1.3383 -0.26% +0.64% +1.3372 +1.3347
Dollar/Canadian CAD=D3 1.2804 1.2800 +0.05% -1.42% +1.2808 +1.2798
Aussie/Dollar AUD=D3 0.7416 0.7419 -0.04% +5.69% +0.7422 +0.7411
NZ NZD=D3 0.7038 0.7042 -0.07% +4.58% +0.7042 +0.7036
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX