FOREX-U.S. dollar gains on nagging worries about coronavirus variant

  • 12/22/2020
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* Congress passes U.S. stimulus bill, awaits Trump approval * Aussie, NZ dollar fall vs dollar * U.S. housing, consumer confidence data disappoints * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E (Adds analyst comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, Dec 22 (Reuters) - The dollar rose on Tuesday in thin, choppy trading, as optimism about a U.S. stimulus bill that Congress passed overnight was tempered by concerns about a coronavirus variant raging in Britain that has caused lockdowns and travel restrictions to contain it. Risk appetite seemed to have taken a hit, with U.S. stocks down except for the Nasdaq, and U.S. Treasuries rallying. Currencies associated with higher risk appetite such as the Australian and New Zealand dollars, as well as the euro and sterling were also weaker against the greenback. Tuesday"s data was weaker than expected, with U.S. existing home sales falling more than expected in November and the consumer confidence index lower than forecast. The weak U.S reports reinforced the dollar"s rally. Overnight, the U.S. Congress passed a $892 billion COVID-19 aid package that aims to shore up the nation"s pandemic response and bolster the battered economy. The coronavirus package is tied to general federal government funding to avert a government shutdown and is now awaiting President Donald Trump"s approval to become law. "The stimulus was already baked in as something that would be done. In fact, it seems small and Democrats promised they will do more since more is indeed needed," said Juan Perez, senior trader at Tempus Consulting in Washington. The new coronavirus variant, meanwhile, roiled markets earlier on Monday, but concerns have eased as medical experts seemed to indicate that the vaccines currently being deployed would be effective against it. Moderna Inc, for instance, expects immunity from its vaccine to protect against the variant and is performing more tests in coming weeks to confirm, the company said in a statement to CNN. "Going into the new year, once the vaccines are rolled out more widely, like at the end of the first quarter, we"re going to have an indication of how this virus plays out," said Ronald Simpson, managing director of global currency analysis at Action Economics in Florida. "I still think the dollar is going to remain under significant pressure for the first half of the year. We have U.S. equities that are overvalued and overpriced. Once COVID calms down there will be more opportunity in emerging markets," he added. In midday trading, the dollar index rose 0.5% to 90.59, as the euro fell 0.6% to $1.2172 . The market has been positioned for a weaker dollar. It is pricing in a pandemic recovery that lifts commodity prices and benefits exporters and their currencies at the expense of the dollar. Sterling also slid against the dollar, down 0.8% at $1.3361. The pound sank versus the euro as well, down 0.2% at 91.10 pence per euro. There is a post-Brexit trade deal on the table between Britain and the European Union, and while both sides want to wrap up negotiations before Christmas Eve, the talks remain strained, the Sun newspaper reported on Tuesday, citing a senior British source. The Australian dollar fell 0.7% to US$0.7532. The New Zealand dollar lost 0.8% to US$0.7043. ======================================================== Currency bid prices at 12:31PM (1731 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index 90.5720 90.1320 +0.50% +0.00% +90.7210 +90.0550 Euro/Dollar $1.2176 $1.2248 -0.59% +8.60% +$1.2257 +$1.2161 Dollar/Yen 103.6250 103.3150 +0.30% -4.65% +103.7300 +103.2950 Euro/Yen 126.17 126.45 -0.22% +3.46% +126.6600 +126.1200 Dollar/Swiss 0.8887 0.8859 +0.32% -8.15% +0.8897 +0.8846 Sterling/Dollar $1.3362 $1.3471 -0.78% +0.78% +$1.3467 +$1.3305 Dollar/Canadian 1.2918 1.2858 +0.47% -0.55% +1.2933 +1.2845 Aussie/Dollar $0.7532 $0.7587 -0.72% +7.35% +$0.7590 +$0.7517 Euro/Swiss 1.0819 1.0841 -0.20% -0.30% +1.0847 +1.0816 Euro/Sterling 0.9109 0.9094 +0.16% +7.75% +0.9155 +0.9084 NZ $0.7043 $0.7096 -0.75% +4.67% +$0.7105 +$0.7032 Dollar/Dollar Dollar/Norway 8.7115 8.6340 +1.08% -0.51% +8.7490 +8.6325 Euro/Norway 10.6101 10.6020 +0.08% +7.83% +10.6588 +10.5450 Dollar/Sweden 8.3202 8.2352 +0.42% -10.99% +8.3450 +8.2442 Euro/Sweden 10.1306 10.0880 +0.42% -3.23% +10.1593 +10.0945 (Reporting by Gertrude Chavez-Dreyfuss in New York Additional reporting by Julien Ponthus in London Editing by Kirsten Donovan and Matthew Lewis)

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