FOREX-Dollar loses out on growing optimism about virus vaccine

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Encouraging vaccine trial offers hope in pandemic battle
* Risk sentiment improves in FX, stocks, commodities
* Kiwi rises after RBNZ interview

By Stanley White
TOKYO, May 19 (Reuters) - The dollar nursed losses against
major currencies on Tuesday after encouraging data from the
trial of a vaccine for COVID-19 reduced safe-haven demand for
the greenback.
The euro held onto hefty gains against the Swiss franc and
the dollar following a proposal by France and Germany for a 500
billion euro ($543 billion) recovery fund offering grants to
regions hit hardest by the coronavirus crisis.
Currencies linked to commodities and other riskier assets
were broadly supported thanks also to a sharp rebound in oil
prices as investors' focus turned to recovery from the pandemic.
"There has been a big improvement in risk sentiment because
of hopes for a vaccine," said Junichi Ishikwa, senior FX
strategist at IG Securities in Tokyo.
"Volatility is falling for stocks and dollar-funding costs
are lower. It's easy for the dollar to fall and for other
currencies to ride the dollar's losses higher."
Wall Street shares, emerging market assets, and commodities
all rallied after encouraging data from a COVID-19 vaccine trial
by U.S. drugmaker Moderna MRNA.O added to the optimism as more
governments scale back lockdown restrictions.
The euro EUR=EBS bought $1.0917 in Asia on Tuesday, having
gained 0.9% against the greenback in the previous session.
The common currency EURCHF=EBS traded at 1.0607 Swiss
franc after jumping on Monday to the highest in more than two
months.
The euro's rally overnight came after France and Germany
proposed that the European Commission borrow money on behalf of
the whole EU for the recovery fund. The news also sent Italian
government bond yields skidding to their lowest in more than a
month. The proposed fund is mostly expected to benefit Italy and
Spain, whose economies have been hit hard by the coronavirus
pandemic but have weak public finances.
The euro's sudden rise will face a test later on Tuesday
with the release of the closely-watched ZEW survey on German
investor sentiment.
The pound GBP=D3 also benefited from the dollar's losses
and rose to $1.2215.
The dollar JPY=EBS was little changed at 107.43 yen.
While coronavirus infection rates in many places have now
fallen to levels low enough to allow factories and businesses to
re-open, some concern remains because the outbreak is not
completely under control.
The novel coronavirus, which causes the COVID-19 illness,
first emerged in China late last year and has paralysed global
economic activity as it spread across the world.
Elsewhere, the antipodean currencies stood tall against
their U.S. counterpart, benefiting from the improvement in risk
appetite and rising commodity prices.
The Australian dollar AUD=D3 rose 0.25% to $0.6540.
The Reserve Bank of Australia will release minutes from its
most recent monetary policy meeting later on Tuesday, which may
help investors determine the chance of further monetary easing.
The New Zealand dollar NZD=D3 rose 0.26% to $0.6055 after
Reserve Bank of New Zealand Deputy Governor Geoff Bascand told
Reuters the central bank will re-evaluate its monetary easing in
about three months to determine whether "to do more or take the
foot off the pedal a little bit."