FOREX-Dollar steadies ahead of debate but set for weekly loss on stimulus hopes

Published 23/10/2020, 01:50
© Reuters.
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* U.S. dollar creeps higher in Asia, but on track for poor
week
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Tom Westbrook
SINGAPORE, Oct 23 (Reuters) - The dollar took stock at the
end of a poor week on Friday, having shed about a cent against
the euro and suffered its largest weekly drop against the yen in
a month, as investors began to wager on a Biden presidency and
big U.S. stimulus.
Daily moves were slight and mostly in the dollar's favour
early in the Asia session as traders awaited the final U.S.
presidential debate, which begins at 0100 GMT.
Markets could be sensitive to any vote-shifting moments as
campaigning hits fever pitch ahead of polling day on Nov. 3.
The dollar has lifted from Wednesday's seven-week low
against a basket of currencies =USD , but still sits about 0.8%
lower for the week and in the bottom half of a monthslong range.
Persistent hopes that Congress might pass a stimulus package
before the election and confidence that spending follows anyway,
no matter who gets elected, has driven a selloff in the bond
market in anticipation of more government borrowing. US/
The dollar has been sold through the week because the
prospect of stimulus has supported investors' mood and their
appetite for riskier currencies instead, while underlying
caution has also given the safe-haven Japanese yen a boost.
"If we do get through and Biden wins and he pushes on with
stimulus, then we're back in to a negative U.S. dollar, risk-on,
positive for Aussie and kiwi kind of story," said Westpac
currency analyst Imre Speizer.
"But for now there's still a bit of a political risk
overhang," he said.
The risk-sensitive Australian dollar AUD=D3 inched 0.1%
higher early on Friday and is about 0.7% firmer this week, with
further gains capped by a growing expectation that the Reserve
Bank of Australia will cut rates when it meets in November.
The New Zealand dollar NZD=D3 slipped 0.l% Friday after
softer-than-expected inflation data, but has gained almost 1%
for the week. The Japanese yen JPY= dipped overnight after U.S. House
Speaker Nancy Pelosi said there was progress in stimulus talks,
but it is about half a percent higher for the week and has
ground nearly 3% higher since April.
The euro EUR= has gained 0.8% this week, though pulled
back overnight as COVID-19 cases surge in Europe.
British, European and U.S. Purchasing Managers' Index
figures are due later on Friday.
Sterling GBP= slipped overnight on uncertainty over Brexit
outlook, but it is up 1.2% this week and is clinging on above
$1.30 thanks to hopes that Britain and the European Union can
reach a trade deal before a transition period ends on Dec. 31.
In offshore trade the Chinese yuan CNH= hovered just short
of a more than two-year high hit earlier in the week. CNY/
Analysts said the debate may not move markets immediately,
but that political uncertainty over the election meant for a
risky environment.
"There may be verbal fireworks but we expect no material
impact on the dollar," said Commonwealth Bank of Australia
currency analyst Kim Mundy.
"We continue to see a high risk that the election outcome is
delayed or contested," she said, adding to near-term downside
risks for the Australian dollar.

========================================================
Currency bid prices at 8:19AM (019 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.1795 $1.1819 -0.20% +5.21% +1.1823 +1.1792
Dollar/Yen JPY=D3 104.8450 104.9250 +0.00% -3.39% +104.9300 +104.9300
Euro/Yen EURJPY= 123.66 123.93 -0.22% +1.40% +124.0100 +123.6600
Dollar/Swiss CHF=EBS 0.9087 0.9072 +0.18% -6.08% +0.9090 +0.9072
Sterling/Dollar GBP=D3 1.3063 1.3083 -0.13% -1.49% +1.3086 +1.3062
Dollar/Canadian CAD=D3 1.3148 1.3139 +0.08% +1.22% +1.3149 +1.3125
Aussie/Dollar AUD=D3 0.7118 0.7118 +0.01% +1.45% +0.7139 +0.7115
NZ NZD=D3 0.6665 0.6675 -0.13% -0.94% +0.6678 +0.6659
Dollar/Dollar


All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX

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