LONDON: The dollar lost a little ground against most currencies on Friday after a measured US presidential debate and headed for weekly losses as investors waited for a breakthrough in stimulus talks in Washington and post-Brexit trade negotiations.

US President Donald Trump adopted a more restrained tone than in the first debate, though exchanges again focused on the handling of the COVID-19 pandemic and personal slights.

The dollar was 0.2% lower against a basket of currencies in midday trades in Europe, just clear of a seven-week low hit on Wednesday. It was down just shy of 1% for the week.

A Biden victory, which polls predict, will probably drive further dollar weakness, because he is expected to spend more on coronavirus aid than Trump.

However, betting markets showed a small movement in Trump's favour in the immediate aftermath of the debate, bookmaker Ladbrokes said on Twitter on Friday - which helped the dollar to strengthen.

Euro zone bond yields inched lower as business surveys in France and Germany showed the impact of the second wave of COVID-19 infections in the bloc's two biggest economies.

Despite the data, the euro ticked up 0.2% against the dollar to $1.1844.

"The PMIs weren't good, but they weren't as bad as expected, and that's the important point", said Marshall Gittler, head of investment research at BDSwiss Group.

"Furthermore, stock prices are being boosted by some good earnings reports from Daimler, Barclays and others, and that's encouraging a "risk-on" mood in FX too", he added.

Adding to the optimistic mood, chief negotiators for Britain and the European Union reported some progress had been made in Brexit trade talks.

Sterling was just slightly down against the dollar at $1.3070.

The safe-haven yen rose about 0.1% to 104.71 per dollar, paring some losses made on Thursday after US House Speaker Nancy Pelosi said stimulus talks had made progress.

Hopes that Congress might pass a stimulus package before the election and confidence that spending would follow, no matter who gets elected, has driven a sell-off in the bond market in anticipation of inflation and government borrowing.

The Chinese yuan ticked up 0.2% against the dollar after an official at China's foreign exchange regulator said it has been more stable than expected, suggesting authorities are not too worried about its recent rise.

The yuan has gained about 7.5% since the end of May as China led the global coronavirus recovery.