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FOREX-Dollar, yen sold as U.S. stimulus hopes boost sentiment

Published 2020-10-07, 08:48 p/m
© Reuters.
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* Piecemeal stimulus hopes sink safe havens of dollar and yen

* Yen hits three-week low; AUD gains

* Kiwi slips as RBNZ explores negative rates

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

By Tom Westbrook

SINGAPORE, Oct 8 (Reuters) - The safe-haven dollar and yen nursed losses on Thursday, after the revival of hopes for some U.S. spending improved investor sentiment and appetite for riskier currencies.

A flurry of late-Tuesday tweets from President Donald Trump, after he cancelled talks with Democrats over coronavirus relief, suggested he was open to piecemeal spending measures.

That lifted equity markets and commodity currencies and sank the safe-haven yen JPY= to a three-week low of 106.11 per dollar overnight. The dollar was weaker on most other majors.

The euro EUR= edged up 0.2% to $1.1767 and held there early in the Asia session. The risk-sensitive Australian dollar AUD=D3 lifted off a one-week low and rose about 0.5% overnight to hold at $0.7137 in Asia. AUD/

With no fresh clues on stimulus, morning moves were slight and leaned in favour of the greenback. The New Zealand dollar NZD=D3 slipped 0.4% after a central bank official said the bank was "actively working" on negative rates. White House officials have played down the likelihood that anything gets passed, but House Speaker Nancy Pelosi is pursuing a standalone bill for aid to airlines. looks like they still can't agree on a bigger package," said Commonwealth Bank of Australia currency analyst Joe Capurso. "If they could get an agreement on that, you'd get a bit more of a reaction and the U.S. dollar would fall."

The overnight mood had been further supported by hints at even more easing from the U.S. Federal Reserve in the minutes of its September meeting.

Many participants had assumed the economy would be supported by fiscal spending, and some are open to further debate about the Fed's bond buying programme. nuance did not come across in Powell's post-meeting press conference nor in recent speeches," National Australia Bank economist Tapas Strickland said in a note on Thursday.

"In that vein it is worth noting that the Fed's (Loretta) Mester on Monday said she might support shifting asset purchases to more longer-dated bonds."

Speeches at 1610 GMT and at 1800 GMT from Fed members Eric Rosengren and Raphael Bostic, respectively, will be closely watched for any further hints at the Fed's internal debates.

Sterling and the New Zealand dollar lagged broad gains against the dollar overnight, and were weighed in early Asian trade.

The kiwi NZD=D3 dipped 0.4% to $0.6558 after a Reserve Bank of New Zealand official told a media briefing on the bank's policy tools that it was "actively working" on negative interest rates and a funding-for-lending programme.

Concerns that the latest Brexit talks were proving less promising than hoped dragged on the pound GBP= , and it was last steady at $1.2918. GBP/

Bank of England Governor Andrew Bailey joins a panel discussion on the impact of COVID-19 at 0725 GMT where remarks on negative rates or other policy considerations could move the currency.

Also on the horizon is the U.S. vice presidential debate due to begin at 0100 GMT, infused with fresh significance by Trump's battle with COVID-19. German trade data at 0600 GMT U.S. jobless figures due at 1230 GMT are also awaited.

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Currency bid prices at 8:43AM (043 GMT) Description

RIC

Last

U.S. Close Pct Change

YTD Pct

High Bid

Low Bid

Previous

Change

Session

Euro/Dollar

EUR=EBS

$1.1766

$1.1765

+0.00%

+4.94%

+1.1770

+1.1762 Dollar/Yen

JPY=D3

106.0700

105.9550

+0.07%

-2.38%

+106.1000 +105.9550 Euro/Yen

EURJPY=

124.79

124.63

+0.13%

+2.33%

+124.8300 +124.6500 Dollar/Swiss

CHF=EBS

0.9170

0.9173

-0.02%

-5.22%

+0.9174

+0.9167 Sterling/Dollar GBP=D3

1.2922

1.2919

+0.02%

-2.58%

+1.2923

+1.2916 Dollar/Canadian CAD=D3

1.3255

1.3255

+0.02%

+2.05%

+1.3261

+1.3252 Aussie/Dollar

AUD=D3

0.7133

0.7141

-0.11%

+1.66%

+0.7142

+0.7131 Euro/Swiss

EURCHF=

1.0791

1.0789

+0.02%

-0.56%

+1.0792

+1.0788 Euro/Sterling

EURGBP=

0.9102

0.9102

+0.00%

+7.67%

+0.9116

+0.9104 NZ

NZD=D3

0.6559

0.6582

-0.36%

-2.54%

+0.6580

+0.6558 Dollar/Dollar

Dollar/Norway

NOK=D3

9.2895

9.3010

+0.00%

+6.03%

+9.2940

+0.0000 Euro/Norway

EURNOK=

10.9337

10.9430

-0.08%

+11.15%

+10.9588

+10.9310 Dollar/Sweden

SEK=

8.8782

8.8743

+0.03%

-5.02%

+8.8847

+8.8717 Euro/Sweden

EURSEK=

10.4553

10.4517

+0.03%

-0.13%

+10.4560

+10.4455

All spots FX= Tokyo spots AFX= Europe spots EFX= Volatilities FXVOL= Tokyo Forex market info from BOJ TKYFX World central bank news CEN Economic Forecasts... ECON

Official rates... INT/RATE Forex Diary....... MI/DIARY

Top events........ M/DIARY Diaries........... DIARY Index........ IND/DIARY Press Digests..... PRESS Polls on G7 economies.. SURVEY/ European markets...... MARKETS/

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