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The dollar edged up from seven-week lows on Thursday as hopes for a fiscal package in the United States before the November elections crumbled again and the global surge in COVID-19 cases fuelled demand for safe-haven assets like the greenback.

Progress towards a U.S. stimulus deal has boosted sentiment in world markets and lifted demand for riskier assets in recent sessions — weighing this week on the dollar, which tends to weaken when risk appetite picks up.

But pressure on the currency eased after U.S. President Donald Trump on Wednesday accused Democrats of being unwilling to craft an acceptable compromise.

News that Europe has seen the number of coronavirus cases surge to a record high, with Spain becoming the first Western European country to exceed 1 million infections, added to the cautious tone in world markets.

This backdrop appeared to favour the dollar, which had fallen for the last three days against a basket of other major currencies.

“There are a host of risk events that you could argue threatens risk assets and those threats should support the dollar,” said MUFG’s head of research, Derek Halpenny.

“Yesterday’s moves were so significant, and with no new news to follow through on, there is a modest recovery in the dollar.”

The dollar index was last trading at 92.863, a touch firmer on the day and above the 92.469 low hit on Wednesday that marked the lowest level since Sept. 2.

The euro was a quarter of a percent lower at $1.18325, down from Wednesday’s one-month highs of $1.18805.

And the dollar was firmer against Japan’s currency at 104.73 yen, above a one-month low hit during the previous session at 104.345.

The tone in currency markets was generally subdued as investors waited for new impetus. A final debate between President Trump and Democratic rival Joe Biden takes place later in the day.

“The U.S. Presidential elections are only 12 days away, before that nobody wants to commit too much to a particular direction in euro/dollar,” said Commerzbank FX analyst Esther Reichelt.

Having hit six-week highs on Wednesday amid Brexit optimism, sterling too pulled back against the U.S. currency. The British pound was last down 0.4% at $1.3093.

The Australian dollar was 0.3% softer versus the greenback, while the New Zealand dollar was a touch firmer at $0.6658 — up from the $0.6551 low touched on Tuesday.

Elsewhere, the Chinese yuan retreated from a 27-month high on signs that the authorities have become increasingly wary over the recent rapid gains in the currency.

The offshore Chinese yuan was last down 0.4%at 6.6724 per dollar.

The U.S. dollar dipped on Tuesday, hitting a one-month low against a basket of major currencies, as investors awaited the outcome of fiscal stimulus talks ahead of the upcoming U.S. presidential election and coronavirus cases spiked in Europe.

The dollar index declined for a second day, with the safe-haven currency hitting 92.991, its lowest since Sept. 21, as House Speaker Nancy Pelosi she was optimistic Democrats could reach a deal with the Trump administration on additional COVID-19 relief that could get aid out by early next month.

The euro, last up 0.49%, hit a one-month high of $1.184 versus the greenback, after having weakened 0.1% to $1.17600 in early London trading.

“You have to think about U.S. dollar weakness as a possible longer-lasting fixture,” said Yousef Abbasi, global market strategist at StoneX.

While fiscal stimulus talks have been at an impasse, investors are looking beyond the Nov. 3 elections, he said.

“The most optimistic stimulus story is the ‘blue wave’ stimulus story: Biden gets the White House, the Senate turns Democrat, and boom, we unlock $4 trillion to $5 trillion in spending in 2021, related to stimulus, some of the Biden initiatives on infrastructure, green energy and things like that,” he said.

While markets are confident a win by Biden would lead to more fiscal stimulus, investors are also wary of a potentially contested election result that might boost the greenback’s safe-haven appeal.

“As we approach U.S. elections and with COVID infections around the globe rising at a fast pace, investors may refrain from engaging into large trading positions,” said Charalambos Pissouros, a senior market analyst at JFD Group.

France reported a massive jump in people hospitalized and Ireland announced some of Europe’s toughest restrictions.

Still, markets have stayed within recent ranges with foreign exchange volumes dropping amid rising uncertainty in both the United States and Europe.

“Currency markets are in wait-and-watch mode with traders unwilling to take big bets before such a major event risk,” said Lee Hardman, currency strategist at MUFG in London.

Sterling dipped 0.07% to 1.2941.

Britain’s chief Brexit negotiator David Frost said there was no basis to resume trade talks with the European Union unless there was a fundamental change in Brussels’ approach.

The pound’s resilience to negative news flows pointed to optimism that a deal will eventually go through, said Stephen Innes, chief global market strategist at Axi.

“Let’s hope constructive progress endures. It feels like we are playing a pinball machine, getting bounced around but not going anywhere these days,” he said.

On the data front, U.S. single-family homebuilding surged to a more than 13-year high in September amid record-low mortgage rates and a migration to the suburbs and low-density areas in search of more room for home offices and schooling.

“These data suggest construction is blazing a trail as the economy normalizes amid the COVID-19 crisis,” ANZ Research said in a note to clients.

Elsewhere, the safe-haven yen edged up 0.05% against the dollar to 105.4650.

The dollar paused on Friday but remained on track for its biggest weekly gain in a month amid growing market caution over a global surge in coronavirus cases and fading prospects of a U.S. stimulus package before the Nov. 3 election.

Fresh curbs to combat COVID-19 have been introduced across Europe while the U.S. Midwest is also battling record spikes in new cases as data shows the country’s economic recovery is losing steam.

Investors will get a further indicator of the health of the U.S. economy with retail sales data due later on Friday. Relief plans remain bogged down in a three-way negotiation between the White House, Senate Republicans and House Democrats.

The dollar and Japanese yen are both on track for weekly gains on investor appetite for safe haven assets, of 0.7% and 0.4% respectively.

The greenback hugged a tight range in morning trading in Europe on Friday, with the dollar index last down 0.1%. The euro strengthened slightly, last up 0.1%.

On a monthly basis, the dollar index is up 0.7%, its biggest rise since end-September.

“The fight against corona is not a sprint but a marathon and that is becoming increasingly clear on the FX market too,” said Esther Reichelt, FX analyst at Commerzbank, in a note.

“The winners will be all those economies and their respective currencies that do best at overcoming the economic challenges posed by the pandemic…Until then, the FX market will be dominated by risk considerations.”

Sterling gained around a third of a percent as markets waited for British Prime Minister Boris Johnson to set out his response to the European Union’s demand for more concessions in Brexit talks.

He had previously set Oct. 15 as a deadline for a deal to be reached. Britain’s Foreign Secretary Dominic Raab said on Friday there was still a trade deal “to be done”.

The dollar bounced back from a three-week low on Tuesday as market players bought it back, particularly against riskier peers, after Chinese authorities appeared to be trying to put a brake on recent rises in the yuan.

The Australian dollar lost about a half percent, taking an additional hit from media reports China has halted coal imports from the country as their relations deteriorate.

But overall risk sentiment was propped up by hope that former U.S. Vice President Joe Biden will beat President Donald Trump in the Nov. 3 U.S. election and push forward with a large stimulus to shore up a pandemic-hit economy.

The dollar index rose 0.1% to 93.190, trying to extend its rebound from Friday’s near-three-week low of 92.997, with the euro falling 0.17% to $1.1794.

The Chinese yuan fell 0.1% to 6.7500 per dollar, after the central bank set a weaker than forecast midpoint, offsetting any boost from strong Chinese trade data.

China’s central bank announced on the weekend the removal of reserve requirements for some foreign exchange forwards, cementing speculation Beijing wants to curb the yuan’s strength.

“Biden trades have been hot in the last several days, in which people sell the dollar, particularly against currencies that have suffered under Trump, like the yuan, the Mexican peso or the Canadian dollar,” said Masaru Ishibashi, joint general manager of Sumitomo Mitsui Bank.

“But if you think that Beijing is sending a message to rein in the yuan’s strength, then it might make sense to unwind that trade for now.”

The Mexican peso also fell 0.4% to 21.270 to the dollar while the Canadian dollar dipped 0.1% to C$1.3124 per dollar.

A Biden victory is seen as negative for the dollar also partly because his pledge to increase corporate tax would reduce returns from investments in the United States, putting pressure on the dollar even against safe-have currencies such as the yen and the Swiss franc.

The yen moved little at 105.43 per dollar while the Swiss franc traded at 0.9102 to the dollar, near its highest in three weeks.

Sterling traded above the key $1.30 level as hopes for a Brexit deal offset concern about pressure on the economy from new coronavirus restrictions British Prime Minister Boris Johnson has announced.

The pound stood near its strongest levels in two weeks against the euro, which changed hands at 0.9043 pound.

On the other hand, the Australian dollar dropped as much as 0.6% to $0.7165, not helped by media reports China has stopped taking shipments of Australian coal.

“Despite the positive risk sentiment, the Aussie appears to have been well contained by further indications that Chinese imports of met and thermal coal have been banned. This is important given that 22% of Australian thermal coal exports went to China in the last year and 28% of met coal,” said Rob Rennie, head of financial market strategy at Westpac.

“We stick to the view that the near-term risks for the A$ are lower and a dip below 0.70 through end October/ early November is still possible.”

The dollar held near three-week lows on Monday amid optimism about fiscal stimulus in the United States, while the yuan fell after China’s central bank changed its policy on yuan reserves.

The dollar index was steady, having seen its biggest loss in six weeks on Friday, when investors upped their bets that a fiscal stimulus package would be agreed to mitigate the economic fallout from COVID-19.

The Trump administration called on Congress to pass a stripped-down version of the relief bill on Sunday, while negotiations on a broader package continue.

The dollar has been buffeted by the on-again, off-again stimulus negotiations. Still, with Nov. 3 election only weeks away, investors are betting that Democrat Joe Biden is more likely to win the U.S. presidency and offer a larger economic package.

“Any negative fallout from a failure to reach a fiscal deal before the election will be dampened by expectations for even bigger stimulus after the election,” MUFG currency analyst Lee Hardman wrote in a note to clients.

“Market participants remain optimistic over a Blue Wave,” he added, citing polling data which shows a Biden lead.

The dollar index was at 93.118 at 0729 GMT, flat on the day and having almost completely reversed its recovery at the end of September.

The euro was down 0.2% on the day at $1.1808. In Europe, the World Health Organization has urged governments to restrict activity to combat a rapid rise in COVID-19 infections.

Speculators cut their euro long positions to a two-month low in the week to Oct. 6, weekly CFTC data showed.

European Central Bank President Christine Lagarde is due to speak at 1100 GMT.

The yen was up 0.1% against the dollar at 105.520. The safe-haven Swiss franc was flat against the euro at 1.07630 .

The riskier New Zealand and Australian dollars were both down around 0.2% on the day, having eased gains from Friday, when they rose to their highest in nearly three weeks .

The yuan fell after the People’s Bank of China (PBOC) said on Saturday that it will lower the reserve requirement ratio for financial institutions when conducting some foreign exchange forwards trading.

Analysts say the move was a bid to curb recent yuan appreciation.

The yuan reached a 17-month high on Friday in both onshore and offshore trade. It has gained more than 6% against the dollar since late May, driven by a favourable yield differential between China and other major economies.

At 0743 GMT on Monday, the onshore yuan was down 0.3% . The offshore yuan was at 6.7109 per dollar, also down 0.3% on the day.

The move was also cited as a reason for weakness in the China-sensitive Australian dollar.

“Markets may take this move as a signal the PBoC intends to slow CNY appreciation in the near term, though we note the accompanying statement included a vow to keep the exchange rate flexible, stabilize market expectations and maintain a “broadly stable” exchange rate,” UBS strategists wrote in a note.

“The next big move in the yuan may be linked to the U.S. election outcome and who will be negotiating trade with China for the next four years,” UBS added.

The safe-haven dollar and yen nursed losses on Thursday, after the revival of hopes for some U.S. spending improved investor sentiment and appetite for riskier currencies.

A flurry of late-Tuesday tweets from President Donald Trump, after he cancelled talks with Democrats over coronavirus relief, suggested he was open to piecemeal spending measures.

That lifted equity markets and commodity currencies and sank the safe-haven yen to a three-week low of 106.11 per dollar overnight. The dollar was weaker on most other majors.

The euro edged up 0.2% to $1.1767 and held there early in the Asia session. The risk-sensitive Australian dollar lifted off a one-week low and rose about 0.5% overnight to hold at $0.7137 in Asia.

With no fresh clues on stimulus, morning moves were slight and leaned in favor of the greenback. The New Zealand dollar slipped 0.4% after a central bank official said the bank was “actively working” on negative rates.

Top White House officials have played down the likelihood that anything gets passed, but House Speaker Nancy Pelosi is pursuing a standalone bill for aid to airlines.

“It looks like they still can’t agree on a bigger package,” said Commonwealth Bank of Australia currency analyst Joe Capurso. “If they could get an agreement on that, you’d get a bit more of a reaction and the U.S. dollar would fall.”

The overnight mood had been further supported by hints at even more easing from the U.S. Federal Reserve in the minutes of its September meeting.

Many participants had assumed the economy would be supported by fiscal spending, and some are open to further debate about the Fed’s bond buying program.

“This nuance did not come across in Powell’s post-meeting press conference nor in recent speeches,” National Australia Bank economist Tapas Strickland said in a note on Thursday.

“In that vein it is worth noting that the Fed’s (Loretta) Mester on Monday said she might support shifting asset purchases to more longer-dated bonds.”

Speeches at 1610 GMT and at 1800 GMT from Fed members Eric Rosengren and Raphael Bostic, respectively, will be closely watched for any further hints at the Fed’s internal debates.

Sterling and the New Zealand dollar lagged broad gains against the dollar overnight, and were weighed in early Asian trade.

The kiwi dipped 0.4% to $0.6558 after a Reserve Bank of New Zealand official told a media briefing on the bank’s policy tools that it was “actively working” on negative interest rates and a funding-for-lending program.

Concerns that the latest Brexit talks were proving less promising than hoped dragged on the pound, and it was last steady at $1.2918.

Bank of England Governor Andrew Bailey joins a panel discussion on the impact of Covid-19 at 0725 GMT where remarks on negative rates or other policy considerations could move the currency.

Also on the horizon is the U.S. vice presidential debate due to begin at 0100 GMT, infused with fresh significance by Trump’s battle with Covid-19. German trade data at 0600 GMT U.S. jobless figures due at 1230 GMT are also awaited.

The dollar was softer against riskier currencies on Tuesday on rising optimism that U.S. lawmakers could agree on new stimulus to blunt the economic impact of the coronavirus.

Risk appetite also improved after U.S. President Donald Trump left the hospital and returned to the White House following treatment for Covid-19, a development viewed as reducing political uncertainties in the near term.

“I think hopes of U.S. stimulus are the main driving force,” said Masafumi Yamamoto, chief currency strategist at Mizuho Securities.

“As for Trump’s discharge, the impact is not clear-cut but it is seen as positive for risk environment to the extent that there are less worries about the White House getting caught in complete chaos and unable to make decisions,” he said.

The euro traded at $1.1792, following a gain of 0.58% on Monday.

The pound changed hands at $1.2990, tackling its resistance around $1.30, despite concerns about a no-deal Brexit.

The dollar advanced on the safe-haven yen to 105.66 yen, staying near its highest levels in three weeks.

The dollar’s index against a basket of six major currencies dropped to 93.381, touching its lowest level in two weeks.

U.S. House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin spoke by phone for about an hour on Monday on coronavirus economic relief and were preparing to talk again Tuesday, continuing their recent flurry of activity working towards a deal on legislation.

White House Chief of Staff Mark Meadows said there is still potential for an agreement among lawmakers in Washington on more economic relief, and that Trump is committed to getting the deal done.

However, the renewed efforts in Congress to reach an agreement on relief funds for the pandemic-hit economy has been complicated by the spread of the coronavirus among key policy makers including Trump.

The president returned to the White House on Monday after a three-night hospital stay for Covid-19 treatment though White House physicians warned he may not be out of the woods yet.

“The market has been nervous about the possibility of a contested election, but it appears Biden is widening the lead, thus reducing the chance of markets not knowing the results for a long time,” said Yujiro Goto, chief currency strategist at Nomura Securities.

“And while markets have thought there will be corporate tax hikes if Democrats sweep both chambers as well as the president … that is being offset by the idea that there will be fiscal stimulus,” he added.

A “blue wave” election outcome would likely accelerate dollar weakness, said Zach Pandl, co-head of global forex at Goldman Sachs in New York.

“The former vice president would likely take a more multilateral approach to foreign policy issues, and would be less likely to surprise markets with tariff increases,” Pandl said, referring to Democrat presidential candidate Joe Biden.

In addition, a corporate tax hike would make U.S. stocks less attractive, and fiscal stimulus tends to depreciate a currency when it comes with high unemployment and low interest rates, he added.

Among the currencies that are not included in the dollar index, the offshore Chinese yuan maintained its firmness at 6.7281 per dollar, having hit its highest level since April last year on Monday.

The Australian dollar jumped 0.3% to $0.7205, after the Reserve Bank of Australia kept interest rates on hold at 0.25% despite widespread expectations of a rate cut.

Currency traders are also focused on the government’s annual budget with Canberra widely expected to keep the fiscal tap open for years to come.

The dollar index slipped slightly on Monday but was little changed from Friday’s close 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 that he had tested positive for COVID-19, triggering investor flight to safer assets and a stock market sell-off.

But early in 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.

“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.”

Investors are also waiting for developments in talks in Washington about a coronavirus relief package after U.S. House Speaker Nancy Pelosi on Sunday reported progress i the discussions.

“Concrete developments have been thin on the ground and we doubt investors will want to chase risk assets until more clarity has emerged,” ING strategists said in a note to clients, adding they expected the dollar index to trade in tight ranges.

The dollar slipped slightly against a basket of currencies, but its index held close to recent ranges, down less than 0.1% on the day at 93.785 at 0650 GMT.

Dollar-yen rose 0.3% to 105.615 at 0659 GMT, recovering from its sharpest fall in more than a month on Friday.

Riskier currencies strengthened overnight but these gains abated by the time European markets opened.

The Australian dollar was up 0.2% at 0.71735, while the New Zealand dollar was down 0.1% at 0.6641.

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 0.1% at $1.17260 at 0712 GMT.

The safe haven Swiss franc was up, lifted by Japanese tech firm NEC saying it will buy Swiss financial software company Avaloq Group AG.

Euro-Swiss was down 0.2% at 1.07620 .Euro zone final PMIs for September are due at 0800 GMT.

British Prime Minister and the head of the European Union’s executive, Ursula von der Leyen, agreed in a phone call on Saturday to step up negotiations on a post-Brexit deal, as the Dec. 31 deadline approaches.

The pound was at $1.2917 at 0721 GMT, down 0.2% on the day .

In focus this week are the U.S. Federal Reserve’s meeting minutes due on Wednesday and European Central Bank meeting minutes follow 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.