FOREX-Vaccine developments keep dollar down; Kiwi hits 2-year high

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Updates prices, adds comment and chart)
By Elizabeth Howcroft
LONDON, Nov 23 (Reuters) - Risk appetite in currency markets
was boosted by progress towards a COVID-19 vaccine rollout even
as PMI data showed a sharp contraction in euro zone business
activity as a result of lockdown restrictions.
AstraZeneca AZN.L on Monday said that its vaccine could be
about 90% effective and it will prepare to submit data to
authorities around the world that have a framework for
conditional or early approval.
This was the latest in a string of positive vaccine
developments after Moderna Inc MRNA.O said on Nov. 16 that its
experimental vaccine was 94.5% effective, a week after Pfizer
Inc PFE.N and BioNTech SE 22UAy.F said their candidate had
demonstrated greater than 90% efficacy, rising to 95% with
analysis of full trial data. Sentiment had been strong overnight after a top U.S. health
official said that vaccinations could begin by mid-December.
"From a market perspective, the vaccine news cements our
bullish view on most pro-cyclical currencies against the dollar
through the turn of the year," Deutsche Bank FX strategists
Robin Winkler and George Saravelos said in a note to clients.
The dollar, which fell 0.4% against a basket of currencies
last week, continued its downward trend as traders' risk
appetite grew and was down 0.3% at 92.086 by 1132 GMT. =USD
The dollar also lost out to the yen, with the pair changing
hands at 103.725. JPY=EBS
The New Zealand dollar surged to a two-year high after
strong retail sales data, reducing the risk of further policy
easing. It continued to strengthen in the European session,
hitting a fresh two-year high of 0.6966 per dollar. NZD=D3
The Australian dollar - a liquid proxy for risk - was up
0.3% at 0.73255. AUD=D3
The Euro-dollar rate crossed $1.19 for the first time in two
weeks and was up 0.4% at $1.19005 by 1134 GMT EUR=EBS .
"We won't really unlock euro-dollar much higher unless we
can solve the EU-UK trade deal, and the EU budget and recovery
fund – those are probably the two things that'll really get it
moving," said Kit Juckes, head of FX strategy at Societe
Generale.
European Union leaders will continue to discuss the bloc's
1.8 trillion euro ($2.14 trillion) COVID-19 recovery plan, which
has been vetoed by Poland and Hungary, German Chancellor Angela
Merkel said last week. The pound was boosted by hopes for a Brexit deal GBP=D3
EURGBP=D3 . The EU's chief Brexit negotiator said that
fundamental divergences remain but both sides were pushing hard
for a deal. Euro zone PMI data showed that the bloc's business activity
contracted sharply in November - even more than expected - as
lockdown measures to control the spread of COVID-19 forced many
businesses in the service industry to close. The bloc's economy is on track for its first double-dip
recession in nearly a decade as the coronavirus second wave
sweeps across Europe, a Reuters poll suggested last week.
The yuan, meanwhile, was dented by fresh U.S.-China
tensions. The Trump administration is close to declaring that 89
Chinese aerospace and other companies have military ties,
restricting them from buying a range of U.S. goods and
technology, according to a draft copy of the list seen by
Reuters. The dollar was up about 0.1% against the offshore yuan at at
6.5597 CNH=EBS by 1140 GMT. = 0.8405 euros)

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