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FOREX-U.S. dollar slumps as equity markets rally; Fed in focus

    * Suga set to succeed Abe as Japan PM, focus turns to new cabinet
    * Dollar falls to two-week low vs yen
    * Dollar under pressure ahead of Fed policy meeting outcome on Wed
    * Graphic: World FX rates in 2020

 (Adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 14 (Reuters) - The dollar slipped on Monday against its major peers, dropping to a
two-week low versus the yen, as positive news about a COVID-19 vaccine and a wave of merger and
acquisition deals lifted the mood in global equity markets.
    Investors also looked ahead to an event-packed week which includes a Federal Reserve meeting and the
appointment of a new Japanese premier.
    U.S. stocks rose on Monday on signs of progress in developing a COVID-19 vaccine and a flurry of
multibillion-dollar deals, including reports of Oracle winning the battle for the U.S. arm of
    "As equities trade more positively at the start of the new week, the dollar is trading weaker again.
The market is still showing that it is likely to fade any dollar strength," said Vassili Serebriakov, FX
strategist at UBS in New York.
    Global equities got a lift after drugmaker AstraZeneca resumed its British clinical trials of
its COVID-19 vaccine, one of the most advanced in development.
    "As long as the market perceives that the market is moving in the right direction with the vaccine,
the dollar will weaken more as a cyclical play," Serebriakov added.
    In morning trading, the dollar index fell 0.4% to 92.919, after posting two straight weeks of
    This week's Fed Reserve meeting will be its first since Chairman Jerome Powell unveiled a policy shift
toward greater tolerance of inflation, effectively pledging to keep interest rates low for longer.
    "There will be pressure on the Fed to back up the new policy goals with some action," said MUFG
strategist Lee Hardman, noting that inflation remained well below target.
    "Expectations are they could strengthen forward guidance, possibly by saying rates will be on hold for
3-4 years," said Hardman, who remains bearish on the greenback.
    Analysts at Standard Chartered said there was a risk the Fed would disappoint dollar bears.
    Speculators trimmed net short dollar positions for the second straight week to $32.67 billion,
according to Reuters calculations and Commodity Futures Trading Commission data. That's off nine-year
highs of $33.68 billion in late August.
    The dollar fell 0.5% against the yen to 105.66 yen, after earlier sliding to a two-week low.
    The Bank of Japan's meeting on Thursday is not expected to yield any policy changes but the bank may
be quizzed on whether it could follow the Fed's inflation stance.
    On the political front, Chief Cabinet Secretary Yoshihide Suga was picked to head Japan's ruling party
on Monday, meaning on Wednesday in parliament he is set to be selected by his peers as prime minister,
taking over from Shinzo Abe.
    Suga has vowed to continue Abe's policies.
    The euro was up 0.3% versus the dollar at $1.1880.
    The single currency had spiked to a one-week high above $1.191 after Thursday's European Central Bank
meeting, before easing back as policymakers talked it down the next day.
    Currency bid prices at 10:10AM (1410 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1879        $1.1845     +0.29%         +5.97%      +1.1887     +1.1831
 Dollar/Yen       JPY=        105.6400       106.1400    -0.47%         -2.96%      +106.1900   +105.6400
 Euro/Yen         EURJPY=     125.51         125.75      -0.19%         +2.92%      +125.9000   +125.5300
 Dollar/Swiss     CHF=        0.9059         0.9086      -0.30%         -6.40%      +0.9098     +0.9060
 Sterling/Dollar  GBP=        1.2901         1.2793      +0.84%         -2.70%      +1.2918     +1.2778
 Dollar/Canadian  CAD=        1.3169         1.3174      -0.04%         +1.41%      +1.3196     +1.3154
 Australian/Doll  AUD=        0.7294         0.7283      +0.15%         +3.89%      +0.7295     +0.7265
 Euro/Swiss       EURCHF=     1.0763         1.0764      -0.01%         -0.82%      +1.0775     +1.0761
 Euro/Sterling    EURGBP=     0.9206         0.9254      -0.52%         +8.90%      +0.9263     +0.9202
 NZ               NZD=        0.6707         0.6664      +0.65%         -0.43%      +0.6714     +0.6660
 Dollar/Norway    NOK=        8.9874         9.0336      -0.51%         +2.38%      +9.0531     +8.9861
 Euro/Norway      EURNOK=     10.6787        10.7024     -0.22%         +8.55%      +10.7121    +10.6716
 Dollar/Sweden    SEK=        8.7595         8.7687      +0.17%         -6.29%      +8.7881     +8.7539
 Euro/Sweden      EURSEK=     10.4090        10.3916     +0.17%         -0.58%      +10.4210    +10.3756
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Sujata Rao and Ritvik Carvalho in London;
editing by Jonathan Oatis)