(Corrects 2-1/2-year low for dollar index in 9th paragraph)
* Pound drops more than 1% with Brexit talks deadlocked
* New coronavirus strain overshadows U.S. stimulus deal
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Kevin Buckland
TOKYO, Dec 21 (Reuters) - The dollar climbed against major
peers on Monday with investors seeking its relative safety as
many countries tightened COVID-19 lockdowns.
Sterling GBP=D3 was the biggest loser in early Asian trading
after Britain imposed tough new restrictions to stem a
fast-spreading new coronavirus strain. Meanwhile, Britain said the European Union must shift
position after Brexit negotiators failed to find agreement on
the weekend, raising the risk that the UK crashes out of the
trading bloc's orbit at the turn of the year with no deal.
The negative sentiment overshadowed a weekend deal among
U.S. congressional leaders for a $900 billion coronavirus aid
package. The pound lost as much as 1.1% to $1.3381 before trading at
$1.3400. The euro slid 0.4% to $1.22135.
"The lockdown news and the stalemate on Brexit is keeping
the market nervous," said Rodrigo Catril, National Australia
Bank's senior currency strategist in Sydney.
"Dollar strength is largely being driven by the move lower
in the pound."
The dollar's rebound comes after it sank to 2 1/2-year lows
against major peers last week, driven by optimism that a
widening vaccine rollout would revive global growth.
The dollar index gained 0.3% to 90.257, after touching
89.723 on Thursday for the first time since April 2018.
Several European countries began closing their doors to
travellers from the UK on Sunday amid alarm about a rapidly
spreading strain of coronavirus.
On the Brexit front, the EU's fishing rights in British
waters continues to be a particular sticking point. British
Health Minister Matt Hancock said on Sunday that the bloc should
drop its "unreasonable demands".
The riskier Antipodean currencies weakened at the start of
the holiday-shortened trading week as investors rushed for haven
assets.
The Aussie dollar dropped 0.5% to 75.895 U.S. cents. Its New
Zealand counterpart fell 0.6% to 71.04 U.S. cents.
The greenback gained 0.1% to 103.450 yen, another
traditional safe haven.
Even so, the mood could shift quickly, NAB's Catril warned,
forecasting that the pound could climb to $1.50 next year if a
last-minute Brexit agreement gets done.
"We still can't get our heads around the fact that a trade
deal will collapse because of fisheries," he said.
"Overall I would say that risk positivity driven by vaccines
and stimulus, plus the fact that fiscal stimulus needs to be
funded by a lot of borrowing in the U.S., still paints a picture
of dollar weakness for 2021."
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Currency bid prices at 9:09AM (009 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2209 $1.2260 -0.40% +8.91% +1.2243 +1.2209
Dollar/Yen JPY=D3 103.4420 103.3200 +0.09% -4.79% +103.4850 +103.3700
Euro/Yen EURJPY= 126.30 126.61 -0.24% +3.57% +126.6300 +126.2700
Dollar/Swiss CHF=EBS 0.8857 0.8832 +0.30% -8.46% +0.8859 +0.8855
Sterling/Dollar GBP=D3 1.3406 1.3528 -0.87% +1.11% +1.3466 +1.3381
Dollar/Canadian CAD=D3 1.2809 1.2788 +0.18% -1.39% +1.2810 +1.2784
Aussie/Dollar AUD=D3 0.7591 0.7624 -0.40% +8.22% +0.7605 +0.7583
NZ NZD=D3 0.7103 0.7142 -0.55% +5.56% +0.7121 +0.7103
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX