FOREX-Dollar holds breath waiting for Trump health updates, fiscal package

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

LONDON, Oct 5 (Reuters) - The dollar index slipped slightly
on Monday but was little changed from Friday's close as
financial markets waited for news about U.S. President Donald
Trump's health and developments in fiscal aid talks in
Washington.
Trump said on Friday that he had tested positive for
COVID-19, triggering investor flight to safer assets and a stock
market sell-off.
But early in the Asian session, Trump made a surprise
appearance in a motorcade outside the hospital where he is being
treated, which helped improve risk appetite. He could be discharged from the hospital today, according to
his doctors. "FX traders cannot agree on how to interpret the recent news
flow," Ulrich Leuchtmann, Commerzbank's head of FX and commodity
strategy, said.
"The biggest issue for the FX market is: it is uncertain
whether this has made the biggest risk of the U.S, elections – a
long political and legal battle about the result – any more or
less likely," he said.
"A battle of this nature is only likely if the contender Joe
Biden wins," he added. "That might have become more likely."
Investors are also waiting for developments in talks in
Washington about a coronavirus relief package after U.S. House
Speaker Nancy Pelosi on Sunday reported progress i the
discussions. "Concrete developments have been thin on the ground and we
doubt investors will want to chase risk assets until more
clarity has emerged," ING strategists said in a note to clients,
adding they expected the dollar index to trade in tight ranges.
The dollar slipped slightly against a basket of currencies,
but its index held close to recent ranges, down less than 0.1%
on the day at 93.785 at 0650 GMT =USD .
Dollar-yen rose 0.3% to 105.615 at 0659 GMT, recovering from
its sharpest fall in more than a month on Friday JPY=EBS .
Riskier currencies strengthened overnight but these gains
abated by the time European markets opened.
The Australian dollar was up 0.2% at 0.71735 AUD=D3 , while
the New Zealand dollar was down 0.1% at 0.6641 NZD=D3 .
The Reserve Bank of Australia's policy meeting and the
Australian budget announcement are on Tuesday. Coronavirus restrictions in Auckland will be lifted this
week, New Zealand Prime Minister Jacinda Ardern said.
The euro was up 0.1% at $1.17260 at 0712 GMT EUR=EBS .
The safe haven Swiss franc was up, lifted by Japanese tech
firm NEC saying it will buy Swiss financial software company
Avaloq Group AG. At 0702 GMT, euro-Swiss was down 0.2% at 1.07620
EURCHF=EBS .
Euro zone final PMIs for September are due at 0800 GMT.
British Prime Minister and the head of the European Union's
executive, Ursula von der Leyen, agreed in a phone call on
Saturday to step up negotiations on a post-Brexit deal, as the
Dec. 31 deadline approaches. The pound was at $1.2917 at 0721 GMT, down 0.2% on the day
GBP=D3 .
In focus this week are the U.S. Federal Reserve's meeting
minutes due on Wednesday and European Central Bank meeting
minutes follow on Thursday. Flash estimates for annual euro zone
inflation came in weaker than expected on Friday, raising
pressure on the European Central Bank to increase its stimulus.