Options-related flows bet on dollar downside Focus on 1st U.S....

• Options-related flows bet on dollar downside
• Focus on 1st U.S. presidential debate
• Dollar could rise if Trump improves chances -analyst
• U.S. consumer confidence rises, lifts risk appetite
• Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Recasts, adds new comments, FX table, updates prices, changes byline, dateline; previous LONDON)

The dollar on Tuesday fell from last week's two-month highs, weighed down by currency flows in the options market as well as for month end, with investors also capitalizing on recent gains in the greenback ahead of the first debate between two U.S. presidential candidates.

"Today the market is mostly flows-driven, options-related and month-end flows that have pulled the dollar lower," said Erik Bregar, head of FX strategy at Exchange Bank of Canada in Toronto.

There were FX options-related flows that bet on the downside in the dollar versus the yen as well as the upside on the euro against the Japanese currency, Bregar said. The euro/yen options have pulled euro/dollar higher.

Some analysts also said investors may also be taking profits on recent dollar gains ahead of the first debate between President Donald Trump and Democratic challenger Joe Biden.

The 90-minute televised debate at 9 p.m. EDT (0100 GMT) will be watched by investors looking for guidance on the candidates' prospects.

"The debate lurks as a potential catalyst for the dollar, particularly if the president can improve his underdog status," said Steven Jon Colangelo, FX dealer at Western Union Business Solutions.

That said FX option traders are not pricing in any significant risk related to the debate. Implied volatility was no higher than it was early Monday, when options expired Tuesday - before the event.

In mid-morning trading, the dollar index fell 0.3% to 93.901 =USD , after hitting a two-month peak on Friday.

The greenback also added to losses, as investors felt a little more confident getting out of the safe-haven currency after data showed U.S. consumer confidence rebounded more than expected in September, as households' views of the labor market improved.

The euro firmed across the board, rising 0.5% against the dollar to $1.1727 EUR=EBS and 0.6% versus the yen to 123.84 yen EURJPY=EBS .

European Central Bank policymakers are increasingly divided over how to steer Europe's economy through a second wave of COVID-19 infections.

The dollar fell to a one-week low against the Swiss franc and was last down 0.5% at 0.92 franc CHF=EBS .

Markets were also waiting for developments in talks over aid for people affected by the coronavirus in the United States.

U.S. House of Representatives Speaker Nancy Pelosi said on Monday Democratic lawmakers were unveiling a new $2.2 trillion fiscal stimulus bill, which she said was a compromise and less costly as it covers a shorter period of time.

Sterling, meanwhile, rose on hopes for a Brexit deal and the Bank of England's deputy governor saying he thought the floor for the central bank's key interest rate was 0.1%.

The pound was last up 0.4% at $1.2883 GBP=D3 .

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	Currency bid prices at 10:37AM (1437 GMT) 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	  EUR=		$1.1728		$1.1664	 +0.55%		 +4.62%	  +1.1743	 +1.1662 
 Dollar/Yen	   JPY=		105.5700	   105.4900	+0.08%		 -3.02%	  +105.7300   +105.3500 
 Euro/Yen		 EURJPY=	 123.86		 123.05	  +0.66%		 +1.57%	  +124.0100   +123.0300 
 Dollar/Swiss	 CHF=		0.9205		 0.9244	  -0.42%		 -4.89%	  +0.9250	 +0.9194 
 Sterling/Dollar  GBP=		1.2851		 1.2827	  +0.19%		 -3.08%	  +1.2901	 +1.2835 
 Dollar/Canadian  CAD=		1.3392		 1.3372	  +0.15%		 +3.13%	  +1.3396	 +1.3352 
 Australian/Doll  AUD=		0.7118		 0.7070	  +0.68%		 +1.38%	  +0.7138	 +0.7069 
 ar																							  

 Euro/Swiss	   EURCHF=	 1.0797		 1.0782	  +0.14%		 -0.51%	  +1.0801	 +1.0781 
 Euro/Sterling	EURGBP=	 0.9124		 0.9084	  +0.44%		 +7.93%	  +0.9139	 +0.9063 
 NZ			   NZD=		0.6585		 0.6552	  +0.50%		 -2.24%	  +0.6596	 +0.6551 
 Dollar/Dollar																				   

 Dollar/Norway	NOK=		9.4483		 9.4832	  -0.37%		 +7.63%	  +9.5060	 +9.4229 
 Euro/Norway	  EURNOK=	 11.0830		11.0634	 +0.18%		 +12.66%	 +11.0936	+11.0395 
 Dollar/Sweden	SEK=		8.9860		 9.0355	  -0.08%		 -3.87%	  +9.0522	 +8.9734 
 Euro/Sweden	  EURSEK=	 10.5391		10.5480	 -0.08%		 +0.67%	  +10.5670	+10.5220 
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Dollar index	https://tmsnrt.rs/3cFr56A 

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