FOREX-Dollar set for best week in three weeks on stimulus uncertainty, virus concerns

Reuters

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    * U.S. retail sales beat expectations
    * Sterling edges higher in volatile trading

 (Updates to U.S. afternoon)
    By Saqib Iqbal Ahmed
    NEW YORK, Oct 16 (Reuters) - The dollar edged lower against
a basket of currencies on Friday, paring some of the week's
gains built on increased caution over a global surge in
coronavirus cases and fading prospects for a U.S. stimulus
package before the Nov. 3 election.
    The greenback pared some of the day's losses after strong
U.S. retail sales data helped assuage concerns about the health
of the U.S. consumer.
    The U.S. dollar index  =USD  was 0.1% lower at 93.676. The
index is up 0.7%, for the week, its best weekly gain in three
weeks.
    Fresh restrictions to combat COVID-19 have been introduced
across Europe, and the U.S. Midwest is battling spikes in new
cases, threatening to derail the country's economic recovery
from the coronavirus shock.  urn:newsml:reuters.com:*:nL8N2H61D2  urn:newsml:reuters.com:*:nL1N2H61BJ
    U.S. relief plans remain bogged down in a three-way
negotiation between the White House, Senate Republicans and
House Democrats.  urn:newsml:reuters.com:*:nL1N2H619Z
    The U.S. budget deficit hit a record $3.132 trillion during
fiscal 2020, more than triple the 2019 shortfall, as a result of
massive coronavirus rescue spending, the U.S. Treasury said on
Friday.  urn:newsml:reuters.com:*:nW1N2GW039
    "Market optimism was punctured this week to the benefit of
the greenback amid a quartet of concerns over the virus,
stimulus, the U.S. economy and the fast-approaching presidential
election," said Joe Manimbo, senior market analyst, at Western
Union Business Solutions in Washington.
    The safe-haven Japanese yen was headed for a weekly gain of
0.2% against the greenback as investor appetite for safe haven
assets remains strong.  JPY=EBS 
    U.S. retail sales increased more than expected in September.
 urn:newsml:reuters.com:*:nL1N2H61J3
    "The unexpectedly strong 1.9% rise in retail sales last
month suggests the economy was carrying more momentum into the
fourth quarter than anticipated, defying fears that the expiry
of enhanced unemployment benefits in the summer would harm the
economy," Michael Pearce, a senior U.S. economist at Capital
Economics, said in a note.
    "But with new coronavirus infections on the rise, we are not
rushing to revise up our forecast that GDP growth will slow to
4% annualised in the fourth quarter," he said.
    Sterling, erased the bulk of its early gains to trade
slightly higher on the day in a choppy session on Friday, after
British Prime Minister Boris Johnson told businesses to get
ready for a no-deal Brexit.  urn:newsml:reuters.com:*:nL8N2H72Z5  urn:newsml:reuters.com:*:nL8N2H710T

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Graphic: World FX rates in 2020    https://tmsnrt.rs/2RBWI5E
Dollar index - weekly change    https://tmsnrt.rs/352uedb
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 (Reporting by Saqib Iqbal Ahmed
Editing by Marguerita Choy and Tom Brown)
 ((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 646 223
6054; Reuters Messaging:
saqib.ahmed.thomsonreuters.com@reuters.net))

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