* Sterling perched above $1.33 as Brussels dinner looms
* Dollar bears take a breather ahead of ECB, fiscal
wrangling
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Tom Westbrook
SINGAPORE, Dec 9 (Reuters) - The dollar earned a reprieve
from selling pressure on Wednesday as traders paused to weigh
risks ahead, ranging from Brexit trade talks in Brussels to
Congress' wrangling over a pandemic relief package and a looming
European Central Bank meeting.
Sterling GBP= , which has whipsawed while trade
negotiations are deadlocked, steadied above recent lows at
$1.3365 early in the Asia session. GBP/
Its fate now rests on whether a dinner between British Prime
Minister Boris Johnson and European Commission president Ursula
von der Leyen in Brussels can deliver a breakthrough.
Other majors mostly held their ground, and the euro and the
Antipodean currencies took a breather after long rallies.
Against a basket of currencies =USD the dollar sat at
90.923, which is about half a percent above a
two-and-a-half-year low it hit on Friday as short sellers piled
in.
"Things are just stalled at the moment, but they haven't
changed," said Westpac currency analyst Imre Speizer.
Uncertainty around Brexit, around the progress of a fiscal
spending package through U.S. Congress and around the outcome of
Thursday's ECB meeting have traders temporarily cautious, he
said.
"We think risk sentiment is going to stay strong," he added.
"But there's a few potential spanners in the works, so people
are thinking: 'Lets just hold off pushing the market even
higher,' and that's why everything's just stopped where it is."
The Australian dollar AUD=D3 found support from
decade-high consumer sentiment, but struggled to advance very
far and sat at $0.7441. The kiwi NZD=D3 held at $0.7041.
AUD/
The Japanese yen JPY= weakened slightly against the dollar
overnight and held there on Wednesday at 104.15 per greenback.
DICEY
Britain faces a chaotic split from the European Union if no
trade deal can be struck by the end of the year because Brexit
transition arrangements would expire without any measures to
protect about $1 trillion in annual trade from tariffs and
quotas.
Volatility gauges for the pound have soared to reflect what
traders reckon is a wild ride ahead. One-week sterling implied
volatility GBPSWO= hit a fresh eight-month high on Wednesday
and the premium of puts to calls GBP1MRR= is elevated.
"Put a gun to my head and I'd be a buyer of sterling, as I
see the risk skewed that Boris would come back with some sort of
agreement," said Chris Weston at Melbourne broker Pepperstone,
though he added rewards for such a bet might be limited.
"Broad positioning is short sterling, but not at extremes by
any means. This limits the prospect we get an exaggerated
short-covering rally to say $1.3800 or $1.4000."
Elsewhere investors are tracking negotiations over U.S.
coronavirus aid, with the Trump administration proposing a $916
billion package on Tuesday after congressional Democrats
rejected a slimmer plan. U.S. job openings data is due later on Wednesday, and on
Thursday the main focus is on the ECB. Investors expect easing
but are unsure what, if anything the bank may do or say about a
tearaway euro that has gained 8% this year.
"It will be a very difficult task for the central bank to
weaken the euro," ING strategists said in a note.
"There is a risk is that the press conference bias pushes
the euro higher, particularly if the forward guidance beyond the
December easing package is not overly strong.
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Currency bid prices at 8:42AM in Singapore (0042 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR=EBS $1.2112 $1.2104 +0.07% +8.04% +1.2116 +1.2102
Dollar/Yen JPY=D3 104.1350 104.1600 +0.00% -4.10% +104.1650 +0.0000
Euro/Yen EURJPY= 126.13 126.07 +0.05% +3.43% +126.1800 +126.0600
Dollar/Swiss CHF=EBS 0.8887 0.8890 +0.00% -8.13% +0.8889 +0.8890
Sterling/Dollar GBP=D3 1.3370 1.3359 +0.09% +0.81% +1.3380 +1.3354
Dollar/Canadian CAD=D3 1.2814 1.2821 -0.05% -1.35% +1.2819 +1.2815
Aussie/Dollar AUD=D3 0.7417 0.7410 +0.11% +5.72% +0.7419 +0.7405
NZ NZD=D3 0.7044 0.7044 -0.01% +4.67% +0.7047 +0.7036
Dollar/Dollar
All spots FX=
Tokyo spots AFX=
Europe spots EFX=
Volatilities FXVOL=
Tokyo Forex market info from BOJ TKYFX