* Dollar holds ground in holiday-thinned Asia trade
* London open, Powell testimony eyed for clues as to next
moves
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Sept 22 (Reuters) - A resurgent dollar held on to
sharp gains on Tuesday after virus fears and worries over delays
in fresh U.S. stimulus drove a wave of selling in just about
every other asset market.
A public holiday in Japan kept moves in the Asia session
modest and calmer trade in equity markets also took some of the
pressure off riskier currencies.
Investors are looking to the London open for their next
cues. U.S. Federal Reserve Chair Jerome Powell's appearance with
Treasury Secretary Steven Mnuchin at a congressional committee
from 1430 GMT is also on the radar.
Against a basket of six major currencies =USD the dollar
held at 93.519, just below a six-week high hit on Monday.
The Japanese yen JPY= , which fell from a six-month peak as
greenback gains gathered pace, edged up to 104.57 per dollar.
The Australian dollar AUD=D3 recovered from a dip when a
senior central banker mentioned negative rates as a policy
option in a speech to trade steady at $0.7223. AUD/
"There was a flight to safety into the greenback and bonds
from the sell off in equities," strategists Philip Wee and
Duncan Tan at Singapore's DBS Bank said in a note.
"Sentiment will remain weak if (Powell and Mnuchin) fail to
break the congressional deadlock to another round of fiscal
stimulus."
Stock market selling, which began in the financial sector
after a fresh dirty-money scandal embarrassed global banks,
started to moderate during Asian trade on Tuesday. MKTS/GLOB
Futures painted a mixed picture, with tiny gains for
Europe's markets and small declines for those in the United
States.
Oil exporters' currencies such as the Norwegian krone NOK=
and Canadian dollar CAD= were parked near multi-week lows as
oil prices nursed steep Monday losses. O/R
"A lot now depends on whether or not what we've seen in the
last 24 hours is sustained," said National Australia Bank's head
of FX, Ray Attrill.
"There's good reason to think that we could be in for a
multi-week period where the dollar at least stops declining."
JUST A CORRECTION?
Investors are worried that rising COVID-19 cases in Europe
and ebbing enthusiasm for fiscal stimulus in the United States,
as election campaigning dominates politics, could dent the
global recovery from the pandemic.
The euro EUR= was held below $1.18 in Asia at $1.1768,
while sterling GBP= was fragile at $1.2822 amid talk of fresh
restrictions in Britain as virus cases grow.
The Telegraph newspaper reported Prime Minister Boris
Johnson will encourage Britons on Tuesday to go back to working
from home. Among the most confounding elements of Monday's
mini-meltdown was the swift reversal of gains by the Japanese
yen, which pulled back from a six-month high as the dollar rose.
The Japanese currency has been among the best performing
majors this month as jitters in stock markets have driven
safe-haven demand.
"It's not uncommon with sudden yen moves that it's driven by
domestic asset managers coming in to buy foreign assets at the
lows, and buying dollars to pay for them," said Stuart Oakley, a
London-based executive at Nomura.
"But I don't really know what is behind this particular
bounce," he said.
"My own personal view is this is all just a correction
within a major trend for stronger asset prices in the U.S. and a
weaker dollar, with the uber-easy U.S. monetary policy the
overwhelming driver of everything."
Investor positioning still has dollar shorts near record
levels 0#NETUSDFX= . Tentative gains in the Chinese yuan
CNH= , which advanced 0.1% to 6.7880 per dollar, suggests at
least some pressure could soon return to the greenback in Asia.
Also on Monday, U.S. President Donald Trump told thousands
of supporters at a political rally that he was rebuffed by
officials when he asked about adjusting the dollar's value.