FOREX-Yuan stands tall but U.S. stimulus doubts cap broader risk rally

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

By Hideyuki Sano
TOKYO, Oct 20 (Reuters) - The yuan held near a two-year high
against the dollar in offshore trade on Tuesday on signs of a
robust economic recovery in China however, doubts about a U.S.
stimulus deal capped gains for other risk currencies.
China's offshore yuan rose as high as 6.6695 per dollar on
Monday, surpassing its 2019 peak and hitting its strongest level
since July 2018. It last stood at 6.6810 CNH= .
Data on Monday showing a recovery in China's consumer sector
helped boost not only the yuan but other currencies, including
the euro. However, broader confidence was later dented by a fall in
U.S. share prices as investors grew cautious about prospects of
a stimulus deal in Washington.
U.S. House of Representatives Speaker Nancy Pelosi and
Treasury Secretary Steve Mnuchin "continued to narrow their
differences" in a telephone conversation on Monday, her
spokesman said. Pelosi hopes that by the end of Tuesday there will be
"clarity" on whether a coronavirus stimulus bill can be passed
before the Nov. 3 presidential election, he said.
"Although Pelosi has set a Tuesday deadline for a deal, it
does not seem like she has a clear conviction that there will be
an agreement," said Shinichiro Kadota, senior strategist at
Barclays.
"Markets probably still think a deal before the election is
unlikely."
In early Tuesday trade, the euro held firm at $1.17695
EUR= , holding a 0.44% gain made on Monday. The dollar traded
little changed at 105.46 yen JPY= .
Sterling also held on to small gains made the previous day
at $1.2947 GBP=D4 .
Britain's chief Brexit negotiator David Frost said there was
no basis to resume trade talks with the European Union unless
there is a fundamental change in Brussels' approach to
negotiations. However, investors still think British and European
negotiators might be able to salvage post-Brexit trade talks to
prevent disruptions that a no-deal finale to the five-year
Brexit drama would cause. Against the euro, the pound was little changed at 90.88
pence per euro EURGBP=D4 , slowly recovering after hitting a 5
1/2-month low of 92.90 pence on Sept. 11.
The Australian dollar is on the defensive after three
straight days of loss on mounting speculation about further
monetary easing by the Reserve Bank of Australia.
RBA Assistant Governor Chris Kent said Australia's central
bank board is considering further monetary policy easing,
including expanding its bond buying programme to include
longer-dated government debt. Traders are focusing on comments from upcoming minutes from
the RBA's policy meeting.