FOREX-Dollar hovers near 2-1/2 low as traders eye U.S. stimulus talks

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

By Eimi Yamamitsu
TOKYO, Dec 2 (Reuters) - The dollar stayed near a 2 1/2-year
low on Wednesday as investors cautiously eyed developments in
talks about further fiscal stimulus from the United States,
while risk currencies held onto gains on improving risk
appetite.
Against major currencies, the dollar index fell 0.7% to
91.318 =USD , having hit its lowest level since late April 2018
of 91.263 overnight.
The Euro and the Kiwi steadied after an overnight jump to
their 2 1/2-year highs as the dollar broadly weakened.
U.S. Treasury Secretary Steve Mnuchin and House of
Representatives Speaker Nancy Pelosi held stimulus talks for the
first time since the election, while a bipartisan group of
senators and House members proposed $908 billion worth of
coronavirus relief measures.
Pelosi said in a statement after the talks that Mnuchin
would review coronavirus relief proposals. U.S. Senate leader Mitch McConnell said on Tuesday that
Congress should include a fresh wave of coronavirus stimulus in
a must-pass $1.4 trillion spending bill aimed at heading off a
government shutdown in the midst of a pandemic. "The currency market is sceptical whether these proposals
could be agreed in a swift manner, since hopes were shattered
once already when a stimulus package didn't come into fruition
before the presidential election," said Masafumi Yamamoto, chief
currency strategist at Mizuho Securities.
"Traders are closely eyeing for convincing clues that the
agreement is actually reached," he said.
Also weighing the safe-haven dollar was weaker-than-expected
U.S. manufacturing activity data and speculation that the
Federal Reserve will act to support the economy before
vaccinations become available. Fed Chair Jerome Powell and Mnuchin urged Congress to
provide more help for small businesses amid a surging
coronavirus pandemic and concern that relief from a vaccine may
not arrive in time to keep them from failing. The Fed meets to set policy on Dec. 15-16.
The euro held ground against the dollar after its strong
performance overnight as it hit the highest level since May
2018. It last fetched $1.2067. Analysts said the European
Central Bank could act against a rapid rise of the currency.
Sterling also remained near a three-month peak against the
greenback after Times Radio said Brexit trade deal talks have
entered the "tunnel" stage of negotiations.
Separately, a senior British minister said on Tuesday there
was still a chance of a no-trade deal Brexit as talks with the
European Union had snagged on fishing, governance rules and
dispute resolution. The pound was little changed at $1.3421 GBP=D3 .
The risk-sensitive Aussie firmed to 0.7389 per dollar after
the Australian GDP data was released AUD=D3 , while the New
Zealand dollar changed hands at $0.7071, holding steady near
the highest level since April 2018 hit overnight. NZD=D3 .
Bitcoin rose to 0.3% at $18,833.63 after hitting a record
high just under $20,000 BTC=BTSP on Tuesday.