* Dollar gives up early gains, euro marginally higher
* FX markets in wait-and-see mode before U.S. election
* Sterling gains as Brexit trade deal talks continue
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Adds details, quotes, latest prices)
By Tommy Wilkes
LONDON, Oct 27 (Reuters) - The U.S. dollar and other
safe-haven currencies struggled to make headway on Tuesday
despite rising worries about a second wave of COVID-19
infections, as investors sat on the sidelines ahead of next
week's U.S. election.
Monday saw the steepest stock market sell-off in a month and
a bond rally, but foreign exchange market activity has remained
relatively muted, with price moves in early Tuesday limited.
That said, analysts warned investors were clearly cautious
after the United States, Russia and France all hit new daily
records for coronavirus infections. They said prices were not
moving much because of a reluctance to build positions in the
run-up to the U.S. Presidential election on Nov. 3.
After initially falling, the euro was up 0.1% by 1130 GMT to
$1.1818 EUR=EBS .
The dollar index, which measures the greenback against a
basket of currencies, edged slightly lower to 92.959 =USD .
The yen and the Swiss franc, both of which investors tend to
flock towards when nervous, were mixed, with the yen higher but
the franc falling slightly JPY=EBS CHF=EBS EURCHF=EBS .
"Many sources of uncertainty are still preventing clearer
trends from emerging," UniCredit analysts said in a research
note.
"The impasse on both U.S. budget talks and Brexit
negotiations, as well as the implications of rising COVID-19
infections on 4Q20 GDP growth, play in favor of more euro-dollar
and sterling-dollar stabilization for now," they said, pointing
to levels of "just above $1.18 and $1.30, respectively."
The usually risk-sensitive Australian AUD=D3 and New
Zealand dollars NZD=D3 traded higher.
The European Central Bank meets on Thursday but analysts are
not expecting any fireworks and say market reaction will be
limited.
"Like most of us, ECB policymakers are in stasis. Triggering
a big market response so close to an important U.S. election
would be tough regardless of the financial and economic
backdrop," Stephen Gallo, European Head of FX Strategy at BMO
Capital Markets, said.
A week out from the U.S. election, national polls give
Democrat Joe Biden a solid lead but the contest is much tighter
in battleground states that could decide the outcome.
Analysts regard a Biden victory, and especially Democrat
control of the Senate, as negative for the dollar since it is
expected to deliver big stimulus spending that would boost
investor sentiment and drive demand for riskier currencies.
Sterling GBP=D3 slipped overnight but was back above $1.30
on Tuesday at $1.3038. It was marginally higher versus the euro
at 90.655 pence EURGBP=D3 .
Negotiations between Britain and the European Union over a
Brexit trade deal continue but analysts say the pound is
unlikely to gain much should an agreement be made. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
Euro vs U.S. dollar https://tmsnrt.rs/3dZafQK
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(Editing by Mark Potter)