* Euro down 0.3% vs dollar
* Dollar flat vs peer safe-haven yen
* Sterling given back some previous session's gains
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Updates prices, adds new comment)
By Olga Cotaga
LONDON, Oct 15 (Reuters) - The Australian dollar hit a
two-week low on Thursday after the head of the central bank
hinted at possible monetary easing, while the risk-off sentiment
kept the U.S. dollar supported and most other major currencies
on the defensive.
The British pound, lifted by signs of progress in Brexit
talks on Wednesday, surrendered some of those gains on Thursday
as concerns about trade talks with Europe resurfaced and London
faced tighter coronavirus restrictions. France has imposed curfews as coronavirus infections rise
and other European Union members were also responding to spiking
new cases with fresh restrictions.
Markets fear a new wave of lockdowns could stall the global
recovery just as hopes for U.S. stimulus before the Nov. 3
election are fading, ditching riskier assets such as equities in
favour of safe-haven such as the dollar and the yen.
"A broader risk-off tone has enveloped markets this
morning," said Chris Beauchamp, chief market analyst at IG.
"Steve Mnuchin's comments about a U.S. stimulus bill now
looking unlikely before the election were perfectly placed to
unseat a market that had rallied hard on hopes of such stimulus,
perhaps naively," Beauchamp said.
The U.S. dollar index traded at 93.78 =USD , a one-week
high, while riskier assets, such as Scandinavian currencies,
were down more than 1% on the day.
This week, COVID-19 vaccine clinical trials from two
pharmaceutical companies got delayed after patients fell ill.
U.S. drug inspectors also uncovered quality-control problems
at an Eli Lilly and Co LLY.N pharmaceutical plant that is
ramping up to manufacture a COVID-19 drug. In Australia, the central bank is assessing whether buying
longer-dated bonds would help the economy and considering an
interest rate cut, Reserve Bank of Australia Governor Philip
Lowe said in a speech. The RBA intervenes to keep
the three-year yield at 0.25% but does not control yields
further out the curve.
Marshall Gittler, head of investment research at BDSwiss
Group, said he expected the Aussie to weaken relative to other
commodity currencies, particularly the Canadian dollar. "I think
there's much more room for further loosening in Australia than
in Canada."
Money markets 0#YIB price in a November rate cut and bond
markets factor in the RBA possibly starting to buy longer-dated
debt, with 10-year bond futures YTCc1 up 8.5 ticks at their
highest since April. AUD/
The Aussie dollar fell about 1.3% to a two-week low of
0.7068 per U.S. dollar AUD=D3 and the Japanese yen by 1% . The
New Zealand dollar followed suit, losing 0.8% against the U.S.
currency. NZD=D3 .
The Norwegian crown hit one week-lows against the dollar and
the euro at 9.3690 NOK=D3 and 10.9705 EURNOK=D3 ,
respectively. The Swedish crown also weakened on concerns a
global slowdown would hurt the country's open economy.
The euro was last down 0.2% at $1.1721 EUR=EBS while the
Japanese yen JPY=EBS was steady at 105.23 to the dollar.
Elsewhere, the British pound fell 0.4% to $1.2961 GBP=D3
and dipped 0.2% against the euro to 90.44 pence EURGBP=D3 .
The day before the pound rose amid hopes that Brexit talks,
scheduled to continue on Thursday and Friday, will continue
beyond this week. UK Prime Minister Boris Johnson had set a
deadline of Oct. 15 for progress in the talks. Traders will be also watching for a line-up of U.S. economic
data later in the session, from initial jobless claims to the
Philly Fed Business Index.