* Better-than-expected German economic sentiment lifts euro
* Greenback falls vs major currencies, except Japanese yen
* Vaccine optimism lifts stocks, but moves in FX contained
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Adds Ifo results and new comment, updates prices)
By Olga Cotaga
LONDON, Aug 25 (Reuters) - The euro rose nearly 0.5% on
Tuesday on better-than-expected German economic data, while the
U.S. dollar fell after the United States and China both hailed a
phone call between their senior trade officials as a success.
German business morale improved more than expected in August
as both manufacturing and services picked up steam, a survey
showed, boosting hopes that Europe's largest economy is set for
a strong recovery following the massive coronavirus shock.
Kit Juckes, macro strategist at Societe Generale, said
Germany's IFO Business Climate index was "just another data
point that helps keep the euro at this stretched level," adding
that "U.S. confidence and home sales data are unlikely to elicit
any response at all."
The euro was last up 0.4% at $1.1831 EUR=EBS , having risen
as high as $1.1842 earlier.
The trade-sensitive Australian dollar and Chinese yuan rose
against the U.S. currency, reaffirming investors' faith that
even as diplomatic ties between the two countries fray, the
trade relationship can endure.
On the call, which had been originally scheduled for Aug.
15, U.S. Trade Representative Robert Lighthizer and Treasury
Secretary Steven Mnuchin spoke with Chinese Vice Premier Liu He.
The United States said both sides "see progress" and China's
commerce ministry called the talks "constructive." The news lifted the Australian dollar AUD=D3 0.2% to
$0.7173 and nudged the Chinese yuan CNH=EBS firmer to 6.9070.
The greenback also inched lower versus the British pound to
stand down 0.4% at $1.3119 GBP=D3 .
The U.S. dollar was only up versus the Japanese yen, last
trading at 106.34, 0.3% stronger JPY=EBS .
Against a basket of currencies =USD the dollar dipped 0.2%
to 93.03. It has steadied this month after a roughly 10% slide
from late March through to early August.
Sentiment, and support for riskier currencies over the
dollar, was also boosted by a Financial Times report which said
that U.S. authorities were considering fast-tracking approval
for a COVID-19 vaccine being developed by AstraZeneca and Oxford
University. Stocks moved further into record territory but FX moves were
contained with markets already looking ahead to a speech from
Federal Reserve Chairman Jerome Powell later in the week, which
could shift the U.S. dollar in either direction.
Investors expect him to strike a dovish tone on Thursday at
the Jackson Hole Symposium and maybe address speculation that
the central bank could adopt a more accommodative stance on
inflation.
"The potential dovish shift in Fed policy should be well
priced in by now which should limit further downside potential
for the U.S. dollar," said Lee Hardman, currency analyst at
MUFG.
Low U.S. yields, mirroring expectations that the Fed is
willing to accept inflation overshooting its target, have been
weighing on the dollar.
"As the release of the latest FOMC minutes revealed, there
is also some upside risk for the U.S. dollar if Chair Powell
disappoints dovish market expectations if any way," Hardman
said.
Investors were also looking ahead to U.S. consumer
confidence figures and new homes sales at 1400 GMT for clues as
to the relative performance of the European and U.S. economies.
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