BREAKING - U.S. Dollar & Currencies Updates - U.S. Election - Nov 6, 2020

TOKYO, Nov 6 (Reuters) - The dollar nursed losses against many currencies on Friday as a contentious U.S. presidential election diminished hopes for large stimulus to support the economy any time soon.

Investors are betting that Democrat Joe Biden will become the next president but Republicans will retain control of the Senate, which will make it difficult for the Democrats to pass the larger fiscal spending they have been pushing.

Biden maintains an edge over President Donald Trump, but a few important states are still counting votes and Trump is mounting legal challenges to vote counts, so there is still a high degree of uncertainty.

A large decline in long-term Treasury yields due to expectations for less fiscal spending, combined with a rally in equities and other risk assets, has placed the dollar under consistent selling pressure that is likely to continue.

"There is a green light for the resumption of dollar selling, reflecting past declines in real interest rates," said Ray Attrill, head of foreign exchange strategy at National Australia Bank in Sydney.

"There's an argument that the U.S. Federal Reserve will have to backstop risk assets. The pandemic is still trending in the

wrong direction."

The dollar index touched a two-month low of 92.473 and last stood at 92.718.

The euro traded at $1.1810 while the offshore Chinese yuan hit a near 2 1/2-year high of 6.6000 to the dollar.

A softer dollar supported the Japanese yen, which climbed to a near eight-month high of 103.43 yen against the dollar overnight. It was steady in early Asian trade at 103.52 yen.

The British pound traded at $1.3131, holding onto a hefty 1.23% gain from Thursday.

Investors also await the release of U.S. non-farm payrolls later on Friday, which is forecast to show a slight slowdown in job creation.

Worries about the U.S. economy are growing, which is a reason to expect declines in the dollar to continue into next year, according to some analysts. In addition to the uncertainty about the presidential election, new coronavirus cases are rising to record levels in several states, which could curb U.S. economic activity.

Elsewhere, the Australian dollar fell against the greenback in Asian trading after the country's central bank said it is prepared to expand bond purchases if needed to support the economy. The declines in the Aussie also dragged the New Zealand dollar lower.

Updated as of 12:44 p.m. (GMT+8), Nov 6, 2020.

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