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Mix sugar and water in medium saucepan. Bring to boil on medium-high heat. Add cranberries, cinnamon and orange peel; return to boil. Reduce heat to medium-low; simmer 10 minutes or until cranberries burst and sauce begins to thicken, stirring occasionally.
Remove from heat. Stir in vanilla. Cool to room temperature. Cover.
Refrigerate until ready to serve.