By John McCrank
NEW YORK, Oct 20 (Reuters) - The dollar dipped on Tuesday,
but moves were muted as investors awaited the outcome of fiscal
stimulus talks ahead of the upcoming U.S. presidential election
and as coronavirus cases spiked in Europe.
The dollar index declined 0.31% and was on track for
its second day of declines as House Speaker Nancy Pelosi set the
end of the day as a deadline for negotiations over a coronavirus
"As important as the fiscal talks are to broader market
sentiment, I think FX has really been looking forward to the
U.S. election," said Mazen Issa, senior FX strategist at TD
"I don't think at this point right now the market really
expects it to happen before the election, so it looks much more
like political theater than anything else," he said of the
As polls have widened in favor of Democratic presidential
candidate Joe Biden, foreign exchange volumes have been
dropping, he added.
While markets are confident a win by Biden would lead to
more fiscal stimulus, potentially weakening the dollar,
investors are also wary of a potentially contested election
result that might boost the safe-haven appeal of the greenback.
"As we approach U.S. elections and with COVID infections
around the globe rising at a fast pace, investors may refrain
from engaging into large trading positions," said Charalambos
Pissouros, a senior market analyst at JFD Group.
France reported a massive jump in people hospitalized and
Ireland announced some of Europe's toughest restrictions.
The euro rebounded to a one-week high on Tuesday as global
stocks recovered from early losses with investors broadly in
consolidation mode before the Nov. 3. presidential vote.
Markets stayed within well-worn recent ranges.
"Currency markets are in wait-and-watch mode with traders
unwilling to take big bets before such a major event risk," said
Lee Hardman, currency strategist at MUFG in London.
The euro rebounded 0.38% to a one-week high at
$1.1815 after weakening 0.1% to $1.17600 in early London
That reflected a broader recovery in European stock markets
which popped into positive territory after registering some
early losses. U.S. stock opened higher.
Elsewhere, the Australian dollar dropped 0.53%, hitting a
three-week low at 0.7030 on increasing expectations of monetary
easing next month by the central bank.
Minutes of the Reserve Bank of Australia's (RBA) last policy
meeting confirmed the board had discussed cutting rates and
buying longer-dated debt as a means to support the economy and
restrain the currency.
Sterling edged up slightly, adding to small gains made the
previous day; it rose 0.16% to 1.2971.
Britain's chief Brexit negotiator David Frost said there was
no basis to resume trade talks with the European Union unless
there was a fundamental change in Brussels' approach.
The pound's resilience to negative news flows pointed to
optimism that a deal will eventually go through, said Stephen
Innes, chief global market strategist at Axi.
"Let's hope constructive progress endures. It feels like we
are playing a pinball machine, getting bounced around but not
going anywhere these days," he said.
Currency bid prices at 9:54AM (1354 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Euro/Dollar $1.1815 $1.1770 +0.38% +5.39% +1.1820 +1.1760
Dollar/Yen 105.6150 105.4150 +0.28% -2.68% +105.7400 +105.5200
Euro/Yen 124.77 124.07 +0.56% +2.31% +124.9100 +124.0500
Dollar/Swiss 0.9076 0.9100 -0.26% -6.20% +0.9110 +0.9071
Sterling/Dollar 1.2971 1.2949 +0.16% -2.21% +1.2979 +1.2911
Dollar/Canadian 1.3170 1.3189 -0.14% +1.39% +1.3204 +1.3168
Aussie/Dollar 0.7030 0.7068 -0.53% +0.20% +0.7070 +0.7021
Euro/Swiss 1.0721 1.0710 +0.10% -1.21% +1.0727 +1.0705
Euro/Sterling 0.9106 0.9086 +0.22% +7.74% +0.9148 +0.9081
NZ 0.6563 0.6606 -0.67% -2.48% +0.6606 +0.6555
Dollar/Norway 9.2815 9.3045 -0.15% +5.91% +9.3490 +9.2700
Euro/Norway 10.9680 10.9750 -0.06% +11.49% +11.0084 +10.9505
Dollar/Sweden 8.7830 8.8231 -0.13% -6.04% +8.8399 +8.7767
Euro/Sweden 10.3786 10.3917 -0.13% -0.87% +10.3986 +10.3727
(Reporting by John McCrank; additional reporting by Saikat
Chatterjee in London; Editing by Bernadette Baum)
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