FOREX-Dollar gives ground as hopes of US stimulus leads traders to riskier currencies

* Chinese yuan rises to year-and-a-half high vs dollar
* Sterling weakens on state-aid Brexit impasse
* Euro up after final manufacturing PMI confirmed
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Olga Cotaga
LONDON, Oct 1 (Reuters) - The dollar fell to a nine-day low
on Thursday, as robust U.S. data and hopes for U.S. fiscal
stimulus left investors confident enough to seek out riskier
currencies.
The Chinese yuan gained the most against the dollar, reach a
year-and-a-half high in the offshore market as a holiday in
China dried up liquidity, exaggerating the moves. In addition,
Chinese data on Wednesday showed its economic recovery was on
track. The Australian dollar and the Norwegian crown also shot up
versus the dollar.
"There's been certainly a dent in liquidity," said Jeremy
Stretch, head of G10 FX strategy at CIBS, which usually
amplifies market moves. "But what we have seen so far is a
generalised risk-on bias on optimism of a stimulus package in
the U.S.
"There's a bit of a race for Congress to get something in
the books before they leave for the recess for the election. If
you've got airlines talking about laying off more than 30,000
workers, that doesn't play as a positive narrative going into
the election if you're the incumbent," Stretch said.
Republican President Donald Trump's administration has
proposed a coronavirus stimulus package to House Democrats worth
more than $1.5 trillion, and hopes are rising that both parties
will reach a compromise. At the same time, jobs figures that showed U.S. private
employers stepped up hiring more than forecast last month and
that Midwest manufacturing grew faster than expected also fed
into the optimism. Along with strong U.S. labour and manufacturing data, the
mood pulled the dollar down to 93.61 against a basket of
currencies =USD , its weakest since Sept. 22. MKTS/GLOB
More U.S. economic data are due later in the day, including
initial jobless claims and the manufacturing Purchasing
Managers' Index (PMI).
The euro zone manufacturing recovery gathered pace last
month, according to the final reading of the manufacturing PMI,
which came in confirmed at 53.7. The final reading for the manufacturing PMI in Britain was
also due. In the euro zone, unemployment is also expected to
have picked up in August, according to a Reuters poll. Data is
due at 0900 GMT.
The euro was last trading at $1.1735 EUR=EBS , up 0.1% on
the day.
The Australian dollar rose 0.3% at $0.7186, having touched
earlier $0.7197, its highest since Sept. 22 AUD=D3 . The
Norwegian crown increased to the same milestone, before giving
back some of those gains to trade up 0.3% at 9.2930 NOK=D3 .
The Chinese yuan rose 0.6% at 6.7457 CNH=EBS after soaring
to 6.7330, its highest since beginning of May 2019.
The British pound fell 0.3% against the U.S. dollar at
$1.2881 GBP=D3 . It also shed 0.2% against the euro to trade at
91.08 pence EURGBP=D3 .
British and EU trade negotiators have failed to close the
gap on state aid, a key element blocking an agreement on
post-Brexit trade ties, officials and diplomatic sources with
the bloc said as 27 national leaders gather in Brussels on
Thursday.