FOREX-Dollar advances as investors shy away from risk

* Euro slips vs USD after German business morale survey
* Risk-sensitive Aussie slips

(Updates to U.S. afternoon)
By Saqib Iqbal Ahmed
NEW YORK, Jan 25 (Reuters) - The dollar edged higher against
a basket of currencies on Monday, as a burst of volatility in
stock markets around the globe sapped investors' appetite for
riskier currencies.
Concerns over the timing and size of additional U.S. fiscal
stimulus sent major U.S. stock indexes briefly more than 1%
lower before they recovered to trade little changed on the day.
The sharp move in stock markets soured FX traders' appetite
for risk, Karl Schamotta, chief market strategist at Cambridge
Global Payments in Toronto, said.
"Your high beta currencies - currencies that are highly
correlated with equity markets and global risk appetites - are
tumbling in synchrony with equity indexes," Schamotta said.
Market sentiment turned more cautious at the end of last
week as European economic data showed that lockdown restrictions
to limit the spread of the coronavirus hurt business activity.
The U.S. Dollar Currency Index =USD was 0.19% higher at
90.396, after rising as high as 90.523, its strongest since Jan.
20.
The euro was down around 0.28% against the dollar. German
business morale slumped to a six-month low in January as a
second wave of COVID-19 halted a recovery in Europe's largest
economy, which will stagnate in the first quarter, the Ifo
economic institute said on Monday.
The Australian dollar - seen as a liquid proxy for risk -
was 0.16% lower against the dollar.
U.S. stocks have scaled new highs in recent sessions even as
concerns about the pandemic-hit economy remain. Investors are
trying to gauge whether officials in U.S. President Joe Biden's
administration could head off Republican concerns that his $1.9
trillion pandemic relief proposal was too expensive.
Despite the dollar's recent rebound - the dollar index is up
about 1.3% since early January - analysts expect a broad dollar
decline during 2021. The net speculative short position on the
dollar grew to its largest in 10 years in the week to Jan. 19,
according to weekly futures data from CFTC released on Friday.
The U.S. Federal Reserve meets on Wednesday and Chair Jerome
Powell is expected to signal that he has no plans to wind back
the Fed's massive stimulus any time soon - news which could push
the dollar down further.
Sterling strengthened on Monday against the weaker euro as
Britain's COVID-19 vaccine rollout over the weekend offered
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World FX rates https://tmsnrt.rs/2RBWI5E
USD https://tmsnrt.rs/3a0DdOD
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