* 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. 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 (LON: AV ) 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 (DE: CBKG ).
"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. 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. 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. 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. 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.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.