By Tom Westbrook
SINGAPORE (Reuters) - The dollar found support on Monday, as surging coronavirus cases in Europe and the United States and a lack of progress toward a U.S. stimulus package put traders in a cautious mood, although hopes for a Brexit trade deal held sterling steady.
Against a basket of currencies (=USD), the greenback traded between steady and slightly firmer early in the Asia session, hovering around the middle of a range it has held for months.
Against the risk-sensitive Australian dollar and New Zealand dollars, it gained about 0.1%. Sterling
The United States has recorded its highest ever number of new COVID-19 cases for two consecutive days, while Italy has ordered restaurants and bars to shut by 6 p.m. as a fresh wave of infections sweeps Europe.
U.S. House Speaker Nancy Pelosi said on Sunday that she expected a White House response on Monday regarding the latest stimulus spending plan - but there have been few tangible signs that a long-stalled deal is actually nearer.
"The combination of receding hopes for a pre-election fiscal deal and the news on COVID and potentially stricter lockdowns is enough to take a bite out of the stock market," said Ray Attrill, head of FX strategy at National Australia Bank.
He said a dip in S&P 500 futures (ESc1) had spilled over into currency markets, where traders are also in a cautious mood ahead of the U.S. election on Nov. 3.
The safe-haven Japanese yen
Analysts reckon that a Joe Biden victory next week, especially if the Democrats win control of the Senate, would likely herald a large U.S. stimulus package and weaken the dollar as the spending improves market sentiment.
"There's nothing to suggest that Biden's poll gap is narrowing, but you can expect that the risk tone can become a bit more cautious as we get closer to next Tuesday," Attrill said from Sydney.
"But against that, there is a view that I would concur with, that if by the middle of next week we have got a clean Biden win ... the short-term reaction to that will be very risk positive and U.S.-dollar negative."
The slight dip in the Aussie
Elsewhere hopes for a breakthrough in the trade-deal stalemate between Britain and Europe held the pound steady above $1.30. [GBP/]
Over the weekend, Britain's Northern Island minister said there was a good chance of a trade deal.
Later on Monday, investors will follow a German sentiment survey at 0900 GMT, following a robust Purchasing Managers' Index figure last week, and U.S. housing data, due at 1400 GMT.
China's top leaders chart the country's economic course for 2021-2025 at a key meeting starting on Monday, and may adopt a lower or more flexible growth target.
The yuan
The Malaysian ringgit
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Currency bid prices at 8:12AM (012 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar (EUR=EBS) $1.1848 $1.1862 -0.12% +5.68% +1.1859 +1.1840
Dollar/Yen
Euro/Yen (EURJPY=) 124.04 124.19 -0.12% +1.71% +124.2200 +123.9800
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Dollar/Canadian
Aussie/Dollar
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