FOREX-Dollar steadies above 7-week lows as markets await clarity on US stimulus

* U.S. stimulus talks remain in focus
* U.S. dollar index holds above 7-week lows
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Dhara Ranasinghe
LONDON, Oct 22 (Reuters) - The dollar was steady above
seven-week lows on Thursday, gaining some respite as hopes of a
fiscal package in the United States ahead of the November
elections crumbled once again.
Progress towards a U.S. stimulus deal has boosted sentiment
in world markets and lifted demand for riskier assets in recent
sessions - weighing on the safe-haven dollar, which tends to
weaken when risk appetite picks up.
But pressure on the currency eased after U.S. President
Donald Trump on Wednesday accused Democrats of being unwilling
to craft an acceptable compromise. In early London trade, the dollar index =USD was a touch
lower against a basket of currencies at 92.612, but holding
above its lowest level since Sept. 2 hit Wednesday.
The euro EUR=EBS edged 0.16% lower to $1.18420, nudging
down one-month highs of $1.18805 hit on Wednesday.
The single currency was taking a breather having rallied
against the greenback, said Commerzbank FX analyst Esther
Reichelt.
"The U.S. Presidential elections are only 12 days away,
before that nobody wants to commit too much to a particular
direction in euro/dollar," she said in a note.
"In particular as hopes of a fiscal package in the U.S.
ahead of the elections are crumbling once again, as it is not
just an agreement between Democrats and the White House that is
needed."
Japan's yen JPY=EBS drifted away from Wednesday's
four-week high of 104.345, last sitting at 104.74 against the
greenback.
Indeed, most major currencies drifted sideways as investors
waited for new direction. A final debate between President Trump
and Democratic rival Joe Biden takes place later in the day.
Analysts said the dollar has also been pressured by a surge
in currencies such as sterling GBP=D3 , which jumped to a
six-week high on Wednesday after Britain's chief Brexit
negotiator said talks with the European Union would resume on
Thursday. Sterling was last trading at $1.3145, little changed on the
day.
The Australian dollar AUD=D3 was 0.1% softer versus the
greenback, while the New Zealand dollar was a touch firmer at
$0.6664 NZD= - up from the $0.6551 low touched on Tuesday.
Elsewhere, the Chinese yuan retreated from a 27-month high
on signs that the authorities have become increasingly wary over
the recent rapid gains in the currency. The offshore Chinese yuan CNH=EBS was last down almost a
fifth of a percent at 6.6548 per dollar.