FOREX-Dollar plumbs two-year low as Fed comes in to focus

    * Dollar index hits 31-month trough, kiwi hits 2.5yr high
    * Aussie and euro mark three-month peaks vs greenback
    * Graphic: World FX rates in 2020

    By Tom Westbrook
    SYDNEY, Nov 30 (Reuters) - The dollar fell to a more than
two-year low on Monday and is set to log its largest monthly
fall since July, as a combination of vaccine optimism and bets
on more monetary easing in the United States drives investors
out of the world's reserve currency.
    Against a basket of currencies, the greenback slipped
0.1% to 91.707, its lowest since April 2018. The risk-sensitive
New Zealand dollar hit a two-and-a-half year high and
is headed for its best monthly percentage gain in seven years.
    "The themes remain familiar: broad dollar weakness amid
improving risk appetite," ANZ Bank analysts said in a note.
    "This sentiment is likely to continue into December and the
(U.S. Federal Reserve) meeting, at which some further action is
likely, given the near-term virus risks in the United States."
    The euro and Australian dollar each rose
slightly to three-month peaks. The Aussie is up more than 5% for
the month, the kiwi 6.4% and the euro 2.7%.
    Sterling stood at $1.3325, having climbed steadily
this month to its highest since September, as investors wagered
a Brexit deal would be brokered even as the deadline for talks
loomed ever larger.
    The dollar index is down some 2.4% for November as promising
trial results for three major vaccine candidates excited
investors about an eventual end to the coronavirus pandemic. It
is nearly 11% below a March peak of 102.990.
    Nervousness about a wave of new infections across Europe and
the United States, and fresh lockdowns, have provided some
support to safe-haven currencies and a slight brake on the
dropping dollar.
    However, as the drawn-out U.S. election has distracted
lawmakers from passing any sort of fiscal spending package,
investors have begun to expect that the Fed will step in,
probably with more bond buying, when it next meets in December.
    Testimony from Fed chair Jerome Powell before Congress on
Tuesday and Wednesday, as well as U.S. labour market data this
week will be closely watched for clues as to the central bank's
thinking and the broad shape of the economy recovery.
    The Japanese yen was a fraction firmer at 104.07 per
dollar on Monday and has gained a little over half a percent
through November as the death toll from the pandemic climbed
towards 1.5 million people.
    "The dollar is gently drifting to the lows of the year as
investors re-allocate portfolios to recovery trades in the rest
of the world," ING strategists Chris Turner and Francesco Pesole
said in a note to clients.   
    "While more lockdown restrictions may stand to curb U.S.
equity markets, the prospect of the Fed being prepared to add
more liquidity should limit any dollar upside. And given that
the dollar index has fallen in seven of the last ten Decembers,
we do favour gentle dollar downside into the end of the year."
    November also marks a sixth consecutive monthly gain for the
Chinese yuan, which has soared some 9% from a low in May.
    That equals a similar run of monthly gains in 2013, but it
is far larger in magnitude as China leads the world out of the
coronavirus pandemic and capital inflows push the currency to
new heights.
    It last sat at 6.5743 per dollar in offshore trade,
more or less steady as investors await the November purchasing
managers' index due at 0100 GMT.
    "These month on month reads are all expected to show
expansion across the Chinese economy," said Michael McCarthy,
chief strategist at stockbroker CMC Markets in Sydney.
    Currency bid prices at 11:05AM in Sydney (0005 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1968        $1.1965     +0.03%         +6.75%      +1.1974     +1.1959
 Dollar/Yen                   104.0600       104.0500    +0.01%         -4.19%      +104.1550   +104.0600
 Euro/Yen                     124.53         124.50      +0.02%         +2.12%      +124.6600   +124.4400
 Dollar/Swiss                 0.9043         0.9045      -0.01%         -6.54%      +0.9046     +0.9044
 Sterling/Dollar              1.3326         1.3318      +0.08%         +0.49%      +1.3338     +1.3325
 Dollar/Canadian              1.2984         1.2985      +0.00%         -0.05%      +1.2995     +1.2978
 Aussie/Dollar                0.7402         0.7384      +0.26%         +5.51%      +0.7404     +0.7388
 NZ                           0.7038         0.7035      +0.06%         +4.61%      +0.7042     +0.7028
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ 

 (Reporting by Tom Westbrook; Editing by Sam Holmes)