- Yen has recouped more than half its vaccine-driven losses
- Dollar steady as risk currencies struggle for headway
- China's economic performance powers yuan to 29-month top
- Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
The safe-haven Japanese yen sat near a one-week high and a steady U.S. dollar held commodity currencies in check on Wednesday, as worries about rising coronavirus cases tempered optimism around promising vaccine trials.
At 104.14 per dollar, the yen JPY= has recouped more than half of the steep losses it suffered last week after Pfizer announced it had developed a working COVID-19 vaccine.
Bitcoin BTC=BTSP , sometimes regarded as a haven asset or at least a hedge against inflation, has surged to a three-year high against the dollar and the risk-sensitive Australian and New Zealand dollars were a fraction softer, along with stocks.
"The slight cooling of equity sentiment has put a cap on currencies," said Westpac currency analyst Imre Speizer.
"We know we've got a vaccine. Now it's about distribution and how quickly it can start to make a difference, which is going to be quite a few months away."
Before then, a tough winter looms. Surging cases have driven record hospitalisations and fresh restrictions on gathering in the United States, while new outbreaks vex authorities in Japan, South Korea and Australia.
Federal Reserve Chair Jerome Powell said on Tuesday that there was "a long way to go" to economic recovery.
The Australian dollar AUD=D3 slipped 0.3% on Tuesday and was a shade weaker still on Wednesday at $0.7288. The New Zealand dollar NZD=D3 was 0.1% softer at $0.6889.
The euro EUR= was steady at $1.1862 and against a basket of currencies the dollar =USD held at 92.439 - a little softer than earlier in the week as a slight bond rally has knocked the shine off U.S. Treasury yields.
"It's back to pondering short-term negatives vs longer-term vaccine positives, and that's creating volatility," ANZ analysts said in a note. "Vaccine deployment isn't an immediate fix ... expect things to remain mixed and messy."
Elsewhere sterling edged higher as traders hoped for a Brexit trade deal breakthrough.
Britain's chief negotiator David Frost has told Prime Minister Boris Johnson to expect a Brussels trade deal "early next week", The Sun newspaper reported, with "a possible landing zone" as soon as next Tuesday.
As soft economic data in the United States weighed on dollar sentiment, strong industrial output in China kept the yuan's barnstorming run alive, sending it to an almost 29-month high of 6.5457 per dollar in offshore trade CNH= .
The Chinese yuan has gained nearly 9% against the dollar since late May, despite the central bank taking various actions to temper its strength.
Later on Wednesday British inflation figures are due and several U.S. Fed members make speeches. In emerging markets, focus is on a Bank of Thailand meeting, though most economists expect rates to be kept on hold.
======================================================== Currency bid prices at 11:19AM in Sydney (0019 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR=EBS $1.1861 $1.1861 +0.03% +5.82% +1.1868 +1.1861 Dollar/Yen JPY=D3 104.1350 104.1900 +0.00% -4.07% +104.1900 +0.0000 Euro/Yen EURJPY= 123.50 123.57 -0.06% +1.27% +123.6300 +123.5100 Dollar/Swiss CHF=EBS 0.9114 0.9116 -0.03% -5.82% +0.9115 +0.9112 Sterling/Dollar GBP=D3 1.3253 1.3250 +0.04% -0.06% +1.3263 +1.3250 Dollar/Canadian CAD=D3 1.3108 1.3107 +0.02% +0.91% +1.3110 +1.3102 Aussie/Dollar AUD=D3 0.7289 0.7300 -0.14% +3.89% +0.7299 +0.7288 NZ NZD=D3 0.6886 0.6894 -0.10% +2.35% +0.6893 +0.6887 Dollar/DollarAll spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX
