FOREX-Dollar halts slide after Mnuchin pulls plug on Fed's emergency schemes

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, Nov 20 (Reuters) - The dollar halted its week-long
slide on Friday after U.S. Treasury Secretary Steven Mnuchin
told the Federal Reserve to return money earmarked for pandemic
lending to businesses, nonprofits and local governments.
While the move was aimed at re-appropriating some $455
billion allocated to Treasury under the CARES Act in the spring,
some investors were concerned about ending programmes that they
think have played a vital role in reassuring markets.
"Investors have banked on the MLF (Municipal Liquidity
Facility) being a reliable, emergency lender to our (municipal
bond) market's core borrowers. It has taken the idea of a
payment default or catastrophic budget problem off the table,"
said Matt Fabian, partner at Municipal Market Analytics at
Westport, Connecticut, in the United States.
"Without the MLF, the market won't collapse, but it will
lack some resilience if its tested by a selloff or more
pronounced credit fears."
The news helped to stop the dollar's slide spurred after
reports that U.S. Senate Republican leaders have agreed to
resume negotiations on another coronavirus stimulus package.
For over a week, the dollar has been losing ground against
riskier currencies due to coronavirus vaccine breakthroughs and
hopes of reduced political uncertainty after the U.S. election.
The dollar index stood at 92.349 =USD , off Thursday's low
of 92.236, though it is still down 0.34% on the week.
The euro fetched $1.1869 EUR= , flat on the day but not far
from this week's high of $1.18935 touched on Tuesday and up 0.3%
on week.
The yen stood at 103.83 per dollar JPY= , retaining its
weekly gain of 0.8%.
"The dollar/yen appears to have recovered strong correlation
with U.S. bond yields over the past two weeks. This points to
risk of further downside in the currency pair, should U.S. bond
yields fall further," said Tohru Sasaki, head of Japan market
research at J.P. Morgan.
The British pound was on the defensive after the Times
newspaper reported that European leaders will urge the European
Commission to publish no-deal Brexit plans as the year-end
deadline approaches. The currency changed hands at $1.3247 GBP=D4 . Against the
euro, it stood at 0.8955 pound per euro EURGBP=D4 , wiping its
gains made over the past two days.
Outside the dollar index basket currencies, the Australian
dollar, which has strong sensitivity to economic sentiment,
dipped 0.1% to $0.7273 AUD=D4 , having erased most of its gains
this week.
The Chinese yuan eased about 0.1% to 6.5796 to the dollar
CNH=D4 after hitting a 2 1/2-year high of 6.5318 on Wednesday.
The Turkish lira held firm following a 2.3% jump on Thursday
after the country's central bank delivered a big rate hike as
expected and pledged to remain tough on inflation. The lira changed hands at 7.5350 to the dollar TRYTOM=D4 ,
near its highest level in almost two months.
Elsewhere, bitcoin retained its bullish tone, trading at
$17.867 BTC=BTSP , near a three-year high touched on Wednesday.