FOREX-Euro struggles as U.S. deal hopes fade, COVID spreads

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

By Saikat Chatterjee
LONDON, Oct 20 (Reuters) - The euro struggled to rise above
the $1.18 level on Tuesday as fading hopes for a U.S.
coronavirus aid package dealt a blow to risky assets worldwide,
with rising coronavirus infections in Europe also weighing on
the single currency.
While markets remain hopeful talks between U.S. House
Speaker Pelosi and Treasury Secretary Mnuchin will result in a
deal before the Nov 3 presidential election, any agreement will
have to pass the Republican-controlled Senate where opposition
to a bigger stimulus bill remains stubborn. Those concerns pushed the euro EUR=EBS lower in early
trades, with the single currency down 0.1% at $1.17600 after it
briefly popped to a one-week high of $1.1794 in the previous
session.
"As we approach U.S. elections and with COVID infections
around the globe rising at a fast pace, investors may refrain
from engaging into large trading positions," said Charalambos
Pissouros, a senior market analyst at JFD Group.
France reported a massive jump in people hospitalized with
COVID-19 and Ireland announced some of Europe's toughest
restrictions. Elsewhere, the Australian dollar dropped 0.3% to $0.7045
AUD=D4 , hitting a three-week low of $0.7038 on increasing
expectations of monetary easing next month by the country's
central bank.
Minutes of the Reserve Bank of Australia's (RBA) last policy
meeting confirmed the Board had discussed cutting rates and
buying longer-dated debt as a means to support the economy and
restrain the currency. Sterling held on to small gains made the previous day at
$1.2941 GBP=D4 .
Britain's chief Brexit negotiator David Frost said there was
no basis to resume trade talks with the European Union unless
there was a fundamental change in Brussels' approach to
negotiations. Elsewhere, the dollar index =USD was broadly steady at
93.484.