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FOREX-Dollar slides in flows-driven market; investors await U.S. debate

    * 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

 (Recasts, adds new comments, FX table, updates prices, changes byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 29 (Reuters) - 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 , 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 and 0.6% versus
the yen to 123.84 yen.
    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
    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.
    Currency bid prices at 10:37AM (1437 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 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
 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/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
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Elizabeth Howcroft in London)