Depressed dollar plumbs lowest levels in nearly 3 months, FOMC minutes awaited

* Dollar trades near 3-month lows

* 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 traded near its lowest
levels in nearly 3 months 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 traded 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.

The greenback recovered some ground by midday in London
however, as some of the early boost to risk appetite faded with
stocks in Europe turning negative. The euro fell 0.1% to the
dollar to $1.18820.

Still, the 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 British pound bought $1.3326, close to its
highest in more than two months.

Against the yen, the dollar gained marginally to
104.48.

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 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, pitting the dollar against a basket
of six major currencies, was at 92.235 after falling 0.4% on
Tuesday.

The onshore yuan rose to 6.5739 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 by midday in London.

Improving risk appetite means the Australian dollar’s
next target is its high of $0.7413 on Sept. 1.

The New Zealand dollar, which has rallied 5.5% so
far this month, is trading just shy of its strongest since June
2018.

Bitcoin, the most popular cryptocurrency, climbed
to $19,241 just short of its record of $19,666 from December
2017.

(Reporting by Ritvik Carvalho; additional reporting by Stanley
White in Tokyo; Editing by Ana Nicolaci da Costa and Chizu
Nomiyama)

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