FOREX-Dollar index slips but holds near 3-week lows; yuan drops

* Dollar index near three-week lows
* China's yuan drops after central bank lowers reserve requirement
* Pound strengthens after lockdown measures announced
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Adds details update on stimulus talks, updates prices)
By Chuck Mikolajczak
New York, Oct 12 (Reuters) - The dollar index was little changed near three-week lows on Monday as
optimism over the possibility of a COVID-19 relief bill was curbed by concern over the pandemic, while
China's yuan fell after the People's Bank of China (PBOC) changed its reserve requirements policy.
On Sunday, the Trump administration called on Congress to pass a stripped-down coronavirus relief bill
using leftover funds from an expired small-business loan program, as negotiations on a broader package
continue to run into roadblocks. A White House spokeswoman said on Monday that Senate
Republicans will go along with what Trump wants in legislation. The greenback has held within a range of about 2% over the past three weeks as talks have gone back
and forth. The dollar had its biggest loss in six weeks on Friday amid rising hopes a fiscal stimulus
package would be agreed to stem the economic fallout from COVID-19. More stimulus is seen as
negative for the dollar.
"The dollar just retains this soft underbelly on expectations that sooner or later there will be some
stimulus out of Washington," said Joe Manimbo, senior market analyst at Western Union Business Solutions
in Washington DC.
"At the same time, if you look at some of the election developments, the polls are trending in a way
that is reducing worries about a contested outcome, that is more risk positive and therefore dollar
negative."
Opinion polls show Biden with a substantial lead nationally, but the advantage is smaller in some of
the states that may decide the election outcome.
The offshore yuan CNHUSD=R fell 0.76% against the dollar after China's central bank said on Saturday
it would lower the reserve requirement ratio for financial institutions when conducting some foreign
exchange forwards trading, a move seen as a bid to curb recent yuan appreciation. The yuan had reached a more than 17-month high on Friday in offshore trade and has gained nearly 8%
against the dollar since late May. But on Monday the offshore yuan was on track for its biggest daily
decline against the dollar since March.
The PBOC's move to end the requirement for banks to set aside cash to cover yuan forward transactions
would make it easier to short the yuan, said RBC's head of Asia FX, Alvin Tan.
The move was also cited by analysts as a reason for weakness in the China-sensitive Australian dollar,
which was down about 0.4%.
The dollar index =USD fell 0.059%.
The euro EUR=EBS was down 0.18% to $1.18105. In Europe, the World Health Organization has urged
governments to restrict activity to combat a rapid rise in COVID-19 infections. The Japanese yen JPY=EBS weakened 0.24% versus the greenback at 105.36 per dollar after Bank of
Japan Governor Haruhiko Kuroda stressed his readiness to take additional monetary easing steps.
The pound held above $1.30, strengthening after Prime Minister Boris Johnson set out on Monday a
three-tier system of local lockdown measures in England GBP=D3 . Sterling GBP=D3 was last trading at
$1.3065, up 0.15% on the day. ========================================================
Currency bid prices at 2:45PM (1845 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1810 $1.1832 -0.18% +5.35% +1.1827 +1.1787
Dollar/Yen JPY=D3 105.3500 105.6300 -0.26% -3.00% +105.6900 +105.2550
Euro/Yen EURJPY= 124.42 124.92 -0.40% +2.03% +124.9600 +124.2900
Dollar/Swiss CHF=EBS 0.9094 0.9096 -0.01% -6.01% +0.9123 +0.9088
Sterling/Dollar GBP=D3 1.3063 1.3045 +0.15% -1.49% +1.3082 +1.3006
Dollar/Canadian CAD=D3 1.3117 1.3115 +0.02% +0.98% +1.3142 +1.3102
Aussie/Dollar AUD=D3 0.7210 0.7243 -0.46% +2.75% +0.7235 +0.7203
Euro/Swiss EURCHF= 1.0741 1.0760 -0.18% -1.02% +1.0774 +1.0735
Euro/Sterling EURGBP= 0.9040 0.9062 -0.24% +6.93% +0.9079 +0.9029
NZ NZD=D3 0.6647 0.6671 -0.30% -1.16% +0.6670 +0.6644
Dollar/Dollar
Dollar/Norway NOK=D3 9.1385 9.1285 +0.28% +4.36% +9.1630 +9.1245
Euro/Norway EURNOK= 10.7954 10.8100 -0.14% +9.73% +10.8240 +10.7760
Dollar/Sweden SEK= 8.7983 8.7792 -0.03% -5.87% +8.8231 +8.7856
Euro/Sweden EURSEK= 10.3912 10.3945 -0.03% -0.75% +10.4127 +10.3820