FOREX-U.S. dollar slides as stocks rally; focus on Fed

    * Suga set to succeed Abe as Japan PM, focus turns to new cabinet
    * Dollar falls to two-week low vs yen
    * Dollar under pressure ahead of Fed policy meeting outcome on Wed
    * Fed expected to reinforce near-zero rates until 2023
    * Graphic: World FX rates in 2020

 (Adds new comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 14 (Reuters) - The dollar slipped on Monday against its major peers, dropping to a
two-week low versus the yen, as positive news about a COVID-19 vaccine and a wave of merger and
acquisition deals lifted the mood in global equity markets.
    Investors also looked ahead to an event-packed week which includes a Federal Reserve meeting and the
appointment of a new Japanese premier.
    U.S. stocks rose on Monday on signs of progress in developing a COVID-19 vaccine and a flurry of
multibillion-dollar deals, including reports of Oracle winning the battle for the U.S. arm of
    Drugmaker AstraZeneca on Monday said it resumed its British clinical trials of its COVID-19
vaccine, one of the most advanced in development, helping kick off a rally in stocks.
    "There's some positive traction on the coronavirus vaccine and that has helped lift the market," said
Amo Sahota, executive director at currency advisory firm Klarity FX in San Francisco.  
    "Generally I would call it a soft, upbeat day. I don't know if we have learned anything significantly
new today that would give us any indication about trend building. Today it's a day that's more supportive
of equities, and so the dollar weakens off," he added.
    In afternoon trading, the dollar index fell 0.3% to 93.029, after posting two straight weeks of
    Speculators trimmed net short dollar positions for the second straight week to $32.67 billion,
according to Reuters calculations and Commodity Futures Trading Commission data. That's off nine-year
highs of $33.68 billion in late August.
    This week's Fed Reserve meeting will be its first since Chairman Jerome Powell unveiled a policy shift
toward greater tolerance of inflation, effectively pledging to keep interest rates low for longer.
    "The updated 'dot-plot' is expected to reinforce the message that the current zero-interest-rate
policy stance is appropriate through 2023," said NatWest in its latest research note, a scenario that is
negative for the dollar.
    Fed officials' median projection on the number of rate moves is commonly referred to as its
    The dollar fell 0.4% against the yen to 105.70 yen, after earlier sliding to a two-week low.
    The Bank of Japan's meeting on Thursday is not expected to yield any policy changes but the bank may
be quizzed on whether it could follow the Fed's inflation stance.
    On the political front, Chief Cabinet Secretary Yoshihide Suga was picked to head Japan's ruling party
on Monday, meaning on Wednesday in parliament he is set to be selected by his peers as prime minister,
taking over from Shinzo Abe.
    Suga has vowed to continue Abe's policies.
    The euro was up 0.2% versus the dollar at $1.1867.
    The single currency had spiked to a one-week high above $1.191 after Thursday's European Central Bank
meeting, before easing back as policymakers talked it down the next day.
        Currency bid prices at 3:36 PM (1936 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1866        $1.1845     +0.18%         +5.85%      +1.1887     +1.1831
 Dollar/Yen       JPY=        105.6900       106.1400    -0.42%         -2.91%      +106.1900   +105.5600
 Euro/Yen         EURJPY=     125.42         125.75      -0.26%         +2.85%      +125.9000   +125.2900
 Dollar/Swiss     CHF=        0.9080         0.9086      -0.07%         -6.18%      +0.9098     +0.9060
 Sterling/Dollar  GBP=        1.2862         1.2793      +0.54%         -2.99%      +1.2918     +1.2778
 Dollar/Canadian  CAD=        1.3175         1.3174      +0.01%         +1.46%      +1.3196     +1.3154
 Australian/Doll  AUD=        0.7294         0.7283      +0.15%         +3.89%      +0.7303     +0.7265
 Euro/Swiss       EURCHF=     1.0775         1.0764      +0.10%         -0.71%      +1.0776     +1.0758
 Euro/Sterling    EURGBP=     0.9224         0.9254      -0.32%         +9.11%      +0.9263     +0.9202
 NZ               NZD=        0.6705         0.6664      +0.62%         -0.46%      +0.6717     +0.6660
 Dollar/Norway    NOK=        9.0281         9.0336      -0.06%         +2.84%      +9.0531     +8.9861
 Euro/Norway      EURNOK=     10.7140        10.7024     +0.11%         +8.91%      +10.7269    +10.6716
 Dollar/Sweden    SEK=        8.7631         8.7687      +0.08%         -6.25%      +8.7881     +8.7539
 Euro/Sweden      EURSEK=     10.4001        10.3916     +0.08%         -0.66%      +10.4220    +10.3756
 (Reporting by Gertrude Chavez-Dreyfuss; editing by Jonathan Oatis)