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FOREX-U.S. dollar slides to two-week low vs yen; commodity currencies up

    * China's yuan surges to 16-month high on economic data
    * Australian, New Zealand, Canadian dollars gain
    * Fed decision looms, seen sticking to dovish stance
    * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

 (Recasts, adds new comment, FX table, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 15 (Reuters) - The dollar dropped to a two-week low versus the yen on Tuesday on
expectations the Federal Reserve will maintain its downbeat stance on the U.S. economy as it grapples with
the pandemic, and keep U.S. interest rates near zero for some time.
    The Fed begins a two-day meeting on Tuesday and analysts expect the U.S. central bank to affirm its
current zero-interest-rate policy over the next three years.
    "There's a possible dovish risk to the Fed meeting," said Edward Moya, senior market analyst, at OANDA
in New York. "And you'll probably find the dollar vulnerable leading up to the Fed announcement."
    In late morning trading, the dollar fell 0.3% against the yen to 105.42, after earlier
sliding to a two-week low of 105.30 yen.
    A break below 105.20 yen could pave the way for further technical selling, analysts said.
   "The U.S. central bank will be wary of uncertainty the U.S. presidential election will bring with it
and wouldn't want to cause unnecessary turmoil in the financial markets," said Fawad Razaqzada, market
analyst, at ThinkMarkets.com in London.
    The dollar index was slightly up on the day at 93.111, as the greenback recovered somewhat
after the euro reversed earlier gains.
    The euro was last down 0.2% at $1.1844.
    Earlier, the euro gained after the ZEW economic sentiment survey showed investor sentiment in Germany
rose in September, despite headwinds from Brexit and rising coronavirus infections.
    The euro along with commodity-linked currencies such the Australian, New Zealand,
and Canadian dollars gained after positive Chinese data overnight.
    China's industrial output accelerated and retail sales grew for the first time this year, beating
analysts' forecasts.
    That pushed the Chinese yuan to its highest since May 2019 against the dollar, which was
last down 0.4% at 6.7808 yuan in the offshore market.
    "China is an economic winner at this point in the pandemic," said Kit Juckes, head of FX strategy at
Societe Generale. 
    "There's a sense that the virus is less of a threat in China now, and also perhaps more widely the
market is looking for a more V-shaped global economic recovery."

    The Australian dollar also rose after minutes of its central bank meeting showed no signs of a further
cut to record-low interest rates.
    U.S. stocks were also higher on the day.
    The positive sentiment in currency markets was also attributed to hopes for a COVID-19 vaccine.
British drugmaker AstraZeneca restarted its vaccine trial in Britain on Saturday though it remains on hold
in the United States.
    
    ========================================================
    Currency bid prices at 10:44AM (1444 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1843        $1.1868     -0.21%         +5.65%      +1.1899     +1.1840
 Dollar/Yen       JPY=        105.4200       105.7200    -0.28%         -3.16%      +105.8100   +105.3100
 Euro/Yen         EURJPY=     124.89         125.42      -0.42%         +2.39%      +125.7600   +124.7600
 Dollar/Swiss     CHF=        0.9083         0.9083      +0.00%         -6.15%      +0.9088     +0.9052
 Sterling/Dollar  GBP=        1.2861         1.2844      +0.13%         -3.00%      +1.2925     +1.2816
 Dollar/Canadian  CAD=        1.3174         1.3174      +0.00%         +1.45%      +1.3186     +1.3134
 Australian/Doll  AUD=        0.7306         0.7288      +0.25%         +4.06%      +0.7342     +0.7268
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.0756         1.0774      -0.17%         -0.88%      +1.0787     +1.0754
 Euro/Sterling    EURGBP=     0.9207         0.9236      -0.31%         +8.91%      +0.9259     +0.9192
 NZ               NZD=        0.6718         0.6698      +0.30%         -0.27%      +0.6736     +0.6685
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        9.0403         9.0344      +0.07%         +2.98%      +9.0527     +8.9902
 Euro/Norway      EURNOK=     10.7103        10.7250     -0.14%         +8.87%      +10.7458    +10.6885
 Dollar/Sweden    SEK=        8.7895         8.7614      +0.08%         -5.97%      +8.7981     +8.7415
 Euro/Sweden      EURSEK=     10.4122        10.4041     +0.08%         -0.54%      +10.4273    +10.3910
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Elizabeth Howcroft in London; Editing by
Andrea Ricci)
  
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