* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
By Julien Ponthus
LONDON, Sept 30 (Reuters) - The dollar ticked up in Europe
on Wednesday, recovering some losses after a two-day fall, as
traders weighed the implications of a bad-tempered first debate
between President Donald Trump and his challenger, Joe Biden.
The dollar index crept just above the 94 mark =USD against
a basket of currencies after two days of losses that followed
the U.S. currency reaching a two-month high last week.
The euro EUR=EBS was down 0.3% against the dollar at
$1.1706.
Overall the dollar was set for its worst quarter since the
spring of 2017 with a fall of about 3.3% as hopes for a swift
recovery from the COVID-19 economic crash made investors exit
safe havens and buy into riskier currencies.
Market action following the debate however showed some
nervousness as uncertainty over the outcome of the U.S.
presidential election remains high after a chaotic encounter in
which the candidates battled over the president's leadership on
the coronavirus pandemic, the economy and taxes. U.S. stocks futures and European stocks traded lower hours
after the debate which, according to political betting odds,
gave the Democratic challenger a slight edge over the incumbent.
"The way the market narrative is playing at the moment is
toward a Biden victory being somewhat negative for the dollar,
because of fiscal expansion taking place when the Fed is on hold
and can tolerate higher inflation," said Stuart Ritson a
portfolio manager at Aviva Investors.
Many market participants were cautious about linking
currency moves to the debate.
"I don't think that the USD recovery is related to the TV
debate, which has, if anything, increased U.S. political risks
and should weigh on the USD," said Thu Lan Nguyen, a foreign
exchange strategist at Commerzbank.
"Instead, we are seeing a natural pullback after the sharp
depreciation in the last two days, which I think is natural",
she said.
Traders also watched for progress in talks about further
U.S. fiscal stimulus to soften the coronavirus blow.
Economic indicators have recently painted an uneven picture
of the economic recovery in Europe, but Wednesday's data were
generally positive.
German retail sales rose more than expected in August,
raising hopes that household spending will power a recovery in
the third quarter. European Central Bank President Christine Lagarde also
grabbed investors' attention as she set the scene for aligning
the ECB's strategy with that of the Federal Reserve, possibly
including a commitment to let inflation overshoot after it has
been low for too long. The dollar rose 0.28% against the Swiss franc at 0.9218
franc, after falling as low as 0.9191 franc overnight CHF=EBS .
Switzerland's KOF leading indicator hit a 10-year high in
September, rising for the fourth time in a row as the economy
extended its recovery from the coronavirus. China's yuan held steady even after twin surveys showed
strong factory activity, backing recent signs of a rebound in
broad sectors of the world's second-biggest economy.
The offshore yuan steadied at 6.8111 per dollar CNH=EBS .
Against the yen, the dollar was stable at 105.64 yen JPY= ,
below a two-week high of 105.74 overnight.