FOREX-Dollar off 2-month peak but on course for best week in 6 months

* Dollar recedes after Wall St rebounds on stimulus hopes
* Mood still shaky on economic, political uncertainties
* Yuan gains on WGBI inclusion, lira gains on surprise rate
hike
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, Sept 25 (Reuters) - The U.S. dollar dipped from a
two-month peak on Friday as renewed hopes of fresh U.S. stimulus
eased investors' concerns about its economic recovery, while the
Chinese yuan gained after the country was added to a global bond
benchmark.
Still, the greenback is on track for its biggest weekly
gains in almost a half year, with investors not convinced if the
dollar's uptrend -- and correction in risk assets that has
driven it -- has run its course.
"I personally think the dollar's rise and risk-off trade
could continue. The U.S. news coverage is getting dominated by
the election. Political uncertainties are likely to weigh on the
markets," said Kazushige Kaida, head of FX Sales at State Street
Bank's Tokyo Branch.
"That also relates to whether there will be another economic
package. No one expects a deal before the election but the
economy does need some kind of help by the end of year as Fed
officials have said lately."
The latest data showed the number of Americans filing new
claims for unemployment benefits unexpectedly increased last
week in a sign the economic recovery was running out of steam as
coronavirus infections and deaths continue to climb.
The dollar index moved little in Asia on Friday at 94.351
=USD . After hitting a two-month high of 94.601 in Thursday's
U.S session, the dollar retreated as stock prices got a lift on
hopes that stalled U.S. stimulus talks could resume.
The index is up 1.4% this week, however, and there remain
doubts over whether the U.S. can overcome divisions to agree on
a package.
Further complicating the political landscape, U.S. president
Donald Trump has said he would unveil his choice to replace the
late Supreme Court Justice Ruth Bader Ginsburg on Saturday, a
move that has drawn sharp battle lines between Republicans and
Democrats.
Investors are also on edge after Trump refused to commit to
a peaceful transfer of power if he lost the election.

Rises in U.S. real yields have also underpinned the dollar.
The yield on 10-year U.S. inflation-protected Treasuries rose to
minus 0.911% US10YTIP=RR , the highest since late July.
The euro changed hands at $1.1665 EUR= after having hit a
two-month low of $1.16265 on Thursday.
The dollar was little moved at 105.48 yen JPY= , staying
near its highest level in over a week.
The British pound managed to stay above Wednesday's
two-month lows after Britain's government launched scaled-back
job support for workers hit by a resurgent COVID-19 pandemic.
Sterling last stood at $1.2754 GBP=D4 .
The yuan gained, stemming its decline over the past week or
so, after FTSE Russell announced it will add Chinese government
bonds to its flagship World Government Bond Index (WGBI)
starting in 2021. "Foreign ownership of Chinese government bonds has picked up
steadily. The inclusion in the WGBI benchmark will prompt
additional foreign flows into the Chinese bond market and
support the yuan," said Kevin Xie, China economist at the
Commonwealth Bank in Sydney.
The renminbi traded at 6.8122 per dollar CFY=CFXS , up
slightly on the day in the onshore market. It has gained around
5% from its lows in May.
The Australian dollar traded at $0.7061 AUD=D4 , having hit
a two-month low of $0.7016 overnight.
The Turkish lira maintained its firm tone following a jump
from Thursday's record low after the country's central bank
unexpectedly hiked interest rates by 200 basis points.
The lira last stood at 7.6150 per dollar TRYTOM=D4 , more
than 1% above its record low of 7.7170 set on Thursday.