FOREX-Dollar holds small gains as markets buffeted by COVID-19 woes, election uncertainty

    * Covid second-wave worries lift dollar modestly
    * AUD, NZD resilient as FX traders wait-and-see ahead of
    * Sino-U.S. tensions drive yuan drop
    * Graphic: World FX rates in 2020

    By Tom Westbrook
    SINGAPORE, Oct 27 (Reuters) - The dollar clung to small
gains on Tuesday as the greenback's safe-haven appeal was
burnished by worries about a second wave of COVID-19, which
drove the steepest stock market selloff in a month and
underpinned a bond rally. 
    The United States, Russia and France all hit new daily
records for coronavirus infections and overnight the S&P 500
index fell 1.9% and Germany's DAX dropped 3.7%. 
    Moves in the currency market were more muted, though the
dollar index lifted about 0.3% overnight and held there
early in Asia trade while regional equities fell.
    The largest gains for the greenback on Monday came against
the, up 0.4%, which was hit by a drop in German business
confidence, and a 0.7% rise on the Canadian dollar as oil
prices slumped.
    The yuan nursed a 0.5% loss as Sino-U.S. tensions
flared over arms sales to Taiwan.    
    "The dollar is broadly stronger, but not massively," said
National Australia Bank senior FX strategist Rodrigo Catril.
    Structural forces, like low real yields, have held back
further gains, he added, and so has a wait-and-see approach to
the U.S. election.
    "I think many would probably remember the bad experiences we
had going in to the Trump-Clinton election (in 2016)," said
    "If you had a position on, you would have been whipsawed big
time. I think the strategy this time is to travel light, and to
choose the opportunity on the day rather than take on a very,
very strong position going into the election."
    The usually risk-sensitive Australian and New Zealand
dollars dipped only marginally overnight and were firm in
the early part of the Asia session.
    The Japanese yen did not move much as U.S. equities
sold off, and was steady at 104.76 per dollar in Asia. Sterling
 slipped overnight but was back above $1.30 on Tuesday.
    A week out from polling day, national polls give Democrat
Joe Biden a solid lead but the contest is much tighter in
battleground states that could decide the outcome.
    Biden and President Donald Trump both spent Monday
campaigning in Pennsylvania.
    Analysts regard a Biden victory, and especially Democrat
control of the Senate, as negative for the dollar since it is
expected to deliver big stimulus spending that would boost
investor sentiment and drive demand for riskier currencies.    
    Positioning data showed long bets on the yen shrank for a
fourth straight week last week, as investors wagered on a Biden
victory, though short bets against the yen also fell - pointing
to heightened uncertainty around the vote.
    The euro nursed losses at $1.1809, having borne the brunt of
worries about fresh coronavirus lockdowns and slipping after the
German Ifo business climate index fell by more than expected and
for the first time in six months in October.
    Traders are waiting for any news to emerge from a meeting of
China's Communist Party leaders to set the next five-year plan,
while keeping a wary eye on the potential fallout from U.S. arms
sales to Taiwan.
    China said it will impose sanctions on Lockheed Martin
, Boeing Defense and Raytheon.

    Elsewhere the Turkish lira hit a record low on
Monday amid a slew of geopolitical concerns and as a surprise
central bank decision to keep its policy rate on hold last week
reveberates through markets.
    Currency bid prices at 8:31AM (031 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar                  $1.1814        $1.1810     +0.04%         +5.38%      +1.1815     +1.1805
 Dollar/Yen                   104.8100       104.8500    +0.00%         -3.47%      +104.8800   +0.0000
 Euro/Yen                     123.81         123.80      +0.01%         +1.53%      +123.8600   +123.7100
 Dollar/Swiss                 0.9076         0.9078      -0.01%         -6.20%      +0.9082     +0.9077
 Sterling/Dollar              1.3021         1.3022      +0.02%         -1.80%      +1.3023     +1.3016
 Dollar/Canadian              1.3196         1.3213      -0.10%         +1.61%      +1.3211     +1.3199
 Aussie/Dollar                0.7129         0.7123      +0.10%         +1.62%      +0.7132     +0.7116
 NZ                           0.6683         0.6678      +0.12%         -0.64%      +0.6686     +0.6675
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Tokyo Forex market info from BOJ 

 (Reporting by Tom Westbrook
Editing by Shri Navaratnam)


Reuters Breakingviews is the world's leading source of agenda-setting financial insight. As the Reuters brand for financial commentary, we dissect the big business and economic stories as they break around the world every day. A global team of about 30 correspondents in New York, London, Hong Kong and other major cities provides expert analysis in real time.

Sign up for a free trial of our full service at and follow us on Twitter @Breakingviews and at All opinions expressed are those of the authors.