FOREX-Election jitters, Trump health keep dollar in tight range

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

(Updates prices, adds commentary and chart)
By Elizabeth Howcroft
LONDON, Oct 5 (Reuters) - The dollar index slipped on Monday
and riskier currencies gained, 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 he had tested positive for COVID-19,
triggering investor flight to safer assets and a stock market
sell-off, as the news added an extra layer of uncertainty to the
Nov. 3 presidential elections.
But early during 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. The Australian dollar - a liquid proxy for risk - was up and
the safe Japanese yen was down, suggesting an improvement in
risk appetite, but the moves in the dollar were less clear-cut
because there is no consensus on how the U.S. election's outcome
would affect the dollar.
"The jury is out. There isn't a clear consensus on how the
dollar should trade on this degree of political uncertainty in
the U.S.," said Jane Foley, senior FX strategist at Rabobank.
The dollar slipped against a basket of currencies, and was
down 0.2% on the day at 93.658 at 1040 GMT =USD .
The dollar rose 0.3% against the yen to 105.66 at 1042 GMT.
Dollar-yen saw its sharpest fall in more than a month on Friday
JPY=EBS .
"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."
Trump's illness has not led to an outpouring of support for
him beyond his core group of followers, as a majority of
Americans think he could have avoided the infection if he had
taken the virus more seriously, a Reuters/Ipsos poll showed.
Goldman Sachs analysts said in a note to clients they were
holding off on recommending more dollar short positions, as they
wait for more information about how Trump's health will affect
the election.
Investors are waiting for developments in talks in
Washington about a coronavirus relief package after U.S. House
Speaker Nancy Pelosi on Sunday reported progress in the
discussions. Rabobank's Foley said that if progress is made on the
coronavirus relief funds then that would provide a more
clear-cut boost to markets' risk appetite.
The Australian dollar was up 0.3% at 0.71815 at 1053 GMT
AUD=D3 , while the New Zealand dollar was flat on the day at
0.6647 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 0.3% at $1.1755 EUR=EBS .
The safe haven Swiss franc rose to a 13-day high versus the
dollar, lifted by Japanese tech firm NEC saying it will buy
Swiss financial software company Avaloq Group AG. At 1055 GMT, euro-Swiss was down 0.1% at 1.0773
EURCHF=EBS .
The pound was a touch below $1.30, down 0.1% on the day
GBP=D3 . Goldman Sachs is advising clients to buy sterling, as it
says that a "thin" trade deal is likely to be struck between
Britain and the European Union by early November. In focus this week are the U.S. Federal Reserve's meeting
minutes due on Wednesday and European Central Bank meeting
minutes 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.