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FOREX-Dollars bought as stimulus hopes ebb; Aussie sinks on easing hints

    * Yen near 2-week peak, dollar firm
    * AUD drops after RBA chief opens door to bond buying, rate
cut 
    * Graphic: World FX rates in 2020 tmsnrt.rs/2RBWI5E

    By Tom Westbrook
    SINGAPORE, Oct 15 (Reuters) - The dollar inched higher on
Thursday as rising coronavirus cases and scant progress towards
a U.S. stimulus deal unsettled investors, while the Aussie
dropped to a one-week low after the central bank chief hinted of
a possible rate cut or bond buying.
    France has imposed curfews as autumn brings a steep rise in 
infections, and the fear is that a new wave of lockdowns could
stall the global recovery just as hopes for U.S. stimulus before
the Nov. 3 election are fading.
    The safe-haven yen stayed just shy of a two-week peak
on the dollar. The greenback held or gained ground elsewhere,
except against sterling which had jumped on signs of progress in
Brexit talks.
    The Australian dollar lost half a percent to
$0.7129 after Reserve Bank of Australia Governor Philip Lowe
mentioned bond buying and a small rate cut as among options for
policy support during the next stages of recovery.
    Lowe said Australia's 10-year yield was among the highest in
the developed world and the central bank was studying what
benefits could come from buying longer-dated debt. He said it
was possible to move rates from a record low 0.25% to 0.1%.
    "These are pretty explicit policy options," said Westpac FX
analyst Sean Callow. "There was enough vibe in there for the
market to lean towards (thinking) that they will do something."
    Slightly better-than-expected Australian employment data did
little to shift those expectations.
    Money markets are priced for a November rate cut and
bond markets think the RBA could start buying further along the
curve, with 10-year bond futures  up 8.5 ticks to their
highest since April.
    Meanwhile, U.S. stimulus plans appear bogged down.
    "Getting something done before the election and executing on
that would be difficult," U.S. Treasury Secretary Steve Mnuchin
said on Wednesday, adding that he and Democrat House Speaker
Nancy Pelosi are still "far apart" on their spending priorities.
    Delay has supported the dollar for a few weeks, by weighing
on investors' sentiment and boosting demand for safer assets.
    But a full blown rally has so far been staved off by the
expectation that spending happens eventually. Against a basket
of currencies the greenback was steady at 93.428.
    "Do not rule out a more defensive tilt as we approach the
U.S. elections, providing some support for the dollar," OCBC
Bank strategist Terence Wu said in a note on Thursday.
    Sterling clung to a 0.5% overnight gain as the
European Union and Britain were set to prolong Brexit talks past
a mid-October deadline to try to bridge stubborn gaps holding up
a new trade agreement, according to sources and documents.
    European Union leaders meeting in Brussels on Thursday will
pressure Britain for concessions, saying a trillion euros worth
of trade could be sunk if London does not budge on fisheries,
fair competition and solving disputes.
    "The right noises seem to be heard from key officials," said
Chris Weston, head of research at broker Pepperstone.
    "Given the rising concerns of COVID 19 into a cold and wet
European winter, the last thing either side need, but more so
the UK, is a move to WTO tariffs," he said. "The prospect of a
Free Trade Agreement (FTA), therefore, seems high."
    ========================================================
    Currency bid prices at 12:30PM (0430 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar                  $1.1749        $1.1745     +0.03%         +4.80%      +1.1756     +1.1741
 Dollar/Yen                   105.2800       105.1150    +0.11%         -3.12%      +105.2900   +105.1500
 Euro/Yen                     123.68         123.50      +0.15%         +1.42%      +123.7700   +123.4800
 Dollar/Swiss                 0.9132         0.9135      +0.02%         -5.59%      +0.9138     +0.9131
 Sterling/Dollar              1.3011         1.3010      +0.02%         -1.89%      +1.3029     +1.3008
 Dollar/Canadian              1.3147         1.3151      +0.00%         +1.23%      +1.3158     +1.3146
 Aussie/Dollar                0.7129         0.7163      -0.47%         +1.60%      +0.7169     +0.7124
 NZ                           0.6646         0.6660      -0.21%         -1.23%      +0.6662     +0.6642
 Dollar/Dollar All spots
Tokyo spots
Europe spots 
Volatilities 
Tokyo Forex market info from BOJ 


 (Reporting by Tom Westbrook in Singapore; Editing by Kenneth
Maxwell and Jacqueline Wong)
  
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