FOREX-Dollar broadly weaker as traders await U.S. stimulus breakthrough

* Dollar index hits 7-week low
* Yuan surges after firmer central bank guidance

(New throughout, updates prices, market activity, comments to
U.S. market open; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Oct 21 (Reuters) - The dollar extended its losses
against a basket of currencies to hit a seven-week low on
Wednesday after U.S. President Donald Trump boosted hopes for a
large fiscal stimulus package, prompting some traders to ramp up
bets on riskier currencies.
The White House and Democrats in the U.S. Congress moved
closer to agreement on a new coronavirus-related relief package
on Tuesday as Trump said he was willing to accept a large aid
bill despite opposition within his own Republican Party.
With just two weeks until the U.S. presidential election,
Trump signaled a willingness to go along with more than $2.2
trillion in new relief, a figure Democrats have been pushing for
months.
"We still rather feel that hopes for quick progress on
fiscal relief are misplaced - the White House and House
Democrats remain apart on key issues and it is clear that a
large-scale deal will not get through the Senate this side of
the election at least," Shaun Osborne, chief FX strategist at
Scotiabank in Toronto, said in a note.
"Large-scale fiscal relief might only emerge in Q1 in the
event of a Democratic sweep. The session ahead is likely to
remain dominated by headlines from Washington but wobbly risk
appetite should act as a restraint on significant USD weakness,"
Osborne said.
The U.S. dollar currency index =USD was 0.4% lower at
92.694, its lowest since Sept. 2.
The greenback slipped to a four-week low against the yen,
with the Japanese currency set to log its best one-day gain
since Aug. 28. JPY=EBS
The riskier New Zealand and Australian dollars both
advanced, with the Kiwi up 1.03% and the Aussie up 0.81 versus
the greenback. NZD=D3 AUD=D3
China's yuan surged, in both offshore and onshore trading,
led by firmer central bank guidance and recent data suggesting a
more sustained recovery in the world's second-largest economy.
CNH=
Sterling GBP=D3 jumped to a six-week high against the U.S.
dollar after the European Union's Brexit negotiator Michel
Barnier told EU lawmakers a trade deal with Britain was still
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Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
The dollar's slide vs the yuan https://tmsnrt.rs/37sryIT
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