* U.S. stimulus talks remain in focus
* U.S. dollar index edges up from 7-week lows
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Updates throughout to reflect recovery in USD, adds fresh
comment, chart)
By Dhara Ranasinghe
LONDON, Oct 22 (Reuters) - The dollar edged up from
seven-week lows on Thursday as hopes for a fiscal package in the
United States before the November elections crumbled again and
the global surge in COVID-19 cases fuelled demand for safe-haven
assets like the greenback.
Progress towards a U.S. stimulus deal has boosted sentiment
in world markets and lifted demand for riskier assets in recent
sessions -- weighing this week on the dollar, which tends to
weaken when risk appetite picks up.
But pressure on the currency eased after U.S. President
Donald Trump on Wednesday accused Democrats of being unwilling
to craft an acceptable compromise. News that Europe has seen the number of coronavirus cases
surge to a record high, with Spain becoming the first Western
European country to exceed 1 million infections, added to the
cautious tone in world markets.
This backdrop appeared to favour the dollar, which had
fallen for the last three days against a basket of other major
currencies.
"There are a host of risk events that you could argue
threatens risk assets and those threats should support the
dollar," said MUFG's head of research, Derek Halpenny.
"Yesterday's moves were so significant, and with no new news
to follow through on, there is a modest recovery in the dollar."
The dollar index =USD was last trading at 92.863, a touch
firmer on the day and above the 92.469 low hit on Wednesday that
marked the lowest level since Sept. 2.
The euro EUR=EBS was a quarter of a percent lower at
$1.18325, down from Wednesday's one-month highs of $1.18805.
And the dollar was firmer against Japan's currency at 104.73
yen, above a one-month low hit during the previous session at
104.345.
The tone in currency markets was generally subdued as
investors waited for new impetus. A final debate between
President Trump and Democratic rival Joe Biden takes place later
in the day. "The U.S. Presidential elections are only 12 days away,
before that nobody wants to commit too much to a particular
direction in euro/dollar," said Commerzbank FX analyst Esther
Reichelt.
Having hit six-week highs on Wednesday amid Brexit optimism,
sterling too pulled back against the U.S. currency. The British
pound was last down 0.4% at $1.3093 GBP=D3 .
The Australian dollar AUD=D3 was 0.3% softer versus the
greenback, while the New Zealand dollar was a touch firmer at
$0.6658 NZD= -- up from the $0.6551 low touched on Tuesday.
Elsewhere, the Chinese yuan retreated from a 27-month high
on signs that the authorities have become increasingly wary over
the recent rapid gains in the currency. The offshore Chinese yuan CNH=EBS was last down 0.4%at
6.6724 per dollar.
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The dollar index during the Covid Crisis https://tmsnrt.rs/2TgWCmE
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