FOREX- Euro rises for a 2nd day as risk appetite returns
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
LONDON, Nov 22 (Reuters) - The euro edged higher for a second consecutive day on Wednesday as investors adjusted positions on bets that the German coalition collapse will not have any impact on a brightening outlook for the European economy.
However, currency markets were closeted in a tight range in a holiday shortened week in the United States and in the absence of any major data this week.
With risk appetite firmly on the front foot, with world stocks perched at a record high and market gauges of volatility heading back towards record lows, even commodity-linked currencies, such as the New Zealand dollar, which have suffered a recent beating found some support.
"The Thanksgiving week holiday is making markets a bit more quieter than usual and currency markets will look forward to the minutes of the ECB meeting on Thursday," said Christin Tuxen, an FX strategist at Danske Bank.
On Thursday, the European Central Bank releases their Oct monetary policy meeting account and SNB Chairman Jordan gives a speech on Switzerland's high current account surplus and its effect on monetary policy.
The euro rose 0.1 percent on Wednesday to $1.1747 against the dollar and not far away from a one-month high of $1.1862 hit last Wednesday.
The euro's gains were also bolstered by the general trend of dollar weakness across the board due to softening U.S. yields.
Spreads between ten and two-year U.S. Treasury bonds narrowed to 57.4 basis points in the previous session, its flattest level since late 2007 and was trading about three basis points higher at around 60 basis points.
The dollar index against a basket of six major currencies was down 0.1 percent at 93.86.
The index fell back from a one-week high of 94.165 overnight after a rally triggered earlier this week by a sagging euro stalled as long-term U.S. Treasury yields continued inching lower.
With outgoing U.S. Federal Reserve Chair Janet Yellen not offering any firm clues on where monetary policy in the world's biggest economy is headed, the dollar's near-term outlook remained uncertain.
Yellen stuck by her prediction that U.S. inflation will soon rebound but offered on Tuesday an unusually strong caveat: she is "very uncertain" about this and is open to the possibility that prices could remain low for years to come.
"The monetary policy side of things is unlikely to provide any momentum for the dollar exchange rates until year-end," Commerzbank strategists said in a note.
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(Reporting by Saikat Chatterjee; Editing by Richard Balmforth)
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