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

    * Dollar index hits 31-month trough, kiwi hits 2.5-year 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 touched 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 drove 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 hit three-month peaks, though moves were small as
world stocks took a breather at the end of the biggest calendar
month rally on record.
    The Aussie is up more than 5% for the month, the kiwi 6.3%
and the euro 2.8%.
    Sterling stood at $1.3325 and is up nearly 3% on the
dollar this month as investors wager a Brexit deal will be
brokered even as the deadline for talks loomed ever larger.
    The dollar index has dropped about 2.5% in November as
promising trial results for 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
    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 0.3% firmer at 103.87 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 six years ago,
but it is far larger in magnitude as global capital flows in to
ride China's remarkable coronavirus recovery.
    Month-end dollar demand weighed on the Chinese currency on
Monday, offsetting another month of strong economic data, and
the yuan fell 0.2% to 6.5851 per dollar.
    The greenback was broadly steady elsewhere, although bitcoin
 advanced 2% to $18,557. It is up 34% this month, its
largest monthly gain since April.
    Later in the day, investors are awaiting European inflation
data and, at 1030 GMT, a speech from European Central Bank
President Christine Lagarde.
    Currency bid prices at 4:16PM in Sydney (0516 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1970        $1.1965     +0.05%         +0.00%      +1.1974     +1.1959
 Dollar/Yen                   103.8650       104.0500    -0.17%         +0.00%      +104.1550   +103.8500
 Euro/Yen                     124.33         124.50      -0.14%         +0.00%      +124.6600   +124.3100
 Dollar/Swiss                 0.9033         0.9045      -0.12%         +0.00%      +0.9046     +0.9034
 Sterling/Dollar              1.3338         1.3318      +0.16%         +0.00%      +1.3343     +1.3324
 Dollar/Canadian              1.2993         1.2985      +0.08%         +0.00%      +1.2995     +1.2978
 Aussie/Dollar                0.7386         0.7384      +0.03%         +0.00%      +0.7407     +0.7384
 NZ                           0.7028         0.7035      -0.09%         +0.00%      +0.7045     +0.7025
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ 

 (Reporting by Tom Westbrook; Editing by Sam Holmes)