* Options-related flows bet on dollar downside
* Focus on 1st U.S. presidential debate
* Dollar could rise if Trump improves chances -analyst
* U.S. consumer confidence rises, lifts risk appetite
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
(Recasts, adds new comments, FX table, updates prices, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Sept 29 (Reuters) - The dollar on Tuesday fell from last week's two-month highs, weighed
down by currency flows in the options market as well as for month end, with investors also capitalizing on
recent gains in the greenback ahead of the first debate between two U.S. presidential candidates.
"Today the market is mostly flows-driven, options-related and month-end flows that have pulled the
dollar lower," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto.
There were FX options-related flows that bet on the downside in the dollar versus the yen as well as
the upside on the euro against the Japanese currency, Bregar said. The euro/yen options have pulled
euro/dollar higher.
Some analysts also said investors may also be taking profits on recent dollar gains ahead of the first
debate between President Donald Trump and Democratic challenger Joe Biden.
The 90-minute televised debate at 9 p.m. EDT (0100 GMT) will be watched by investors looking for
guidance on the candidates' prospects. "The debate lurks as a potential catalyst for the dollar, particularly if the president can improve
his underdog status," said Steven Jon Colangelo, FX dealer at Western Union Business Solutions.
That said FX option traders are not pricing in any significant risk related to the debate. Implied
volatility was no higher than it was early Monday, when options expired Tuesday - before the event.
In mid-morning trading, the dollar index fell 0.3% to 93.901 =USD , after hitting a two-month peak
on Friday.
The greenback also added to losses, as investors felt a little more confident getting out of the
safe-haven currency after data showed U.S. consumer confidence rebounded more than expected in September,
as households' views of the labor market improved. The euro firmed across the board, rising 0.5% against the dollar to $1.1727 EUR=EBS and 0.6% versus
the yen to 123.84 yen EURJPY=EBS .
European Central Bank policymakers are increasingly divided over how to steer Europe's economy through
a second wave of COVID-19 infections. The dollar fell to a one-week low against the Swiss franc and was last down 0.5% at 0.92 franc
CHF=EBS .
Markets were also waiting for developments in talks over aid for people affected by the coronavirus in
the United States.
U.S. House of Representatives Speaker Nancy Pelosi said on Monday Democratic lawmakers were unveiling
a new $2.2 trillion fiscal stimulus bill, which she said was a compromise and less costly as it covers a
shorter period of time. Sterling, meanwhile, rose on hopes for a Brexit deal and the Bank of England's deputy governor saying
he thought the floor for the central bank's key interest rate was 0.1%. The pound was last up 0.4% at $1.2883 GBP=D3 .
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Currency bid prices at 10:37AM (1437 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1728 $1.1664 +0.55% +4.62% +1.1743 +1.1662
Dollar/Yen JPY= 105.5700 105.4900 +0.08% -3.02% +105.7300 +105.3500
Euro/Yen EURJPY= 123.86 123.05 +0.66% +1.57% +124.0100 +123.0300
Dollar/Swiss CHF= 0.9205 0.9244 -0.42% -4.89% +0.9250 +0.9194
Sterling/Dollar GBP= 1.2851 1.2827 +0.19% -3.08% +1.2901 +1.2835
Dollar/Canadian CAD= 1.3392 1.3372 +0.15% +3.13% +1.3396 +1.3352
Australian/Doll AUD= 0.7118 0.7070 +0.68% +1.38% +0.7138 +0.7069
ar
Euro/Swiss EURCHF= 1.0797 1.0782 +0.14% -0.51% +1.0801 +1.0781
Euro/Sterling EURGBP= 0.9124 0.9084 +0.44% +7.93% +0.9139 +0.9063
NZ NZD= 0.6585 0.6552 +0.50% -2.24% +0.6596 +0.6551
Dollar/Dollar
Dollar/Norway NOK= 9.4483 9.4832 -0.37% +7.63% +9.5060 +9.4229
Euro/Norway EURNOK= 11.0830 11.0634 +0.18% +12.66% +11.0936 +11.0395
Dollar/Sweden SEK= 8.9860 9.0355 -0.08% -3.87% +9.0522 +8.9734
Euro/Sweden EURSEK= 10.5391 10.5480 -0.08% +0.67% +10.5670 +10.5220
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