FOREX-U.S. dollar slips as risk sentiment picks up, but keeps positive outlook

Reuters

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    * Risk appetite rises with stocks up, U.S Treasuries selling off
    * Analysts expect the dollar to rise in near term
    * Euro rises ahead of ECB meeting on Thursdy

 (Adds new analyst comment, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 21 (Reuters) - The safe-haven dollar on Wednesday pulled back from more than three-month
highs as risk appetite made a comeback with stocks higher, although investors remained cautious amid
inflation fears and concerns about the highly-contagious coronavirus variant.
    Another safe haven, the Japanese yen, was also down against the dollar, as risk aversion eased.
    The Delta variant of the coronavirus, which has caused a surge in infections worldwide, rose to the top
of investor concerns along with inflation this week, prompting global stocks to drop sharply on Monday.
European equity markets though picked up on Wednesday and Wall Street shares rose as well.
 urn:newsml:reuters.com:*:nL1N2OX00W urn:newsml:reuters.com:*:nL4N2OX26Y
    In afternoon New York trading, the dollar index, a measure of its value against six major currencies
fell 0.2% to 92.755  =USD . On Tuesday, the index hit a more than three-month high.
    Market participants though remained bullish on the dollar's outlook, at least over the next few months.
    "Between yield differentials and COVID-driven safe-haven demand, the U.S. dollar has been the proverbial
belle of the forex ball this week," said Matt Weller, global head of market research at FOREX.com and City
Index.
    "These themes should continue to support the dollar in the coming weeks, but a recovery in the market's
risk appetite, especially if driven by additional monetary or fiscal stimulus from the U.S., would undercut
the nascent trend of strength in the greenback," he added.
    The Federal Reserve's stimulus measures or quantitative easing have restrained the dollar as it
increased the currency's supply in the financial system.
    "Currently, we have high inflation in the U.S. which is keeping the door open for the Fed to taper
stimulus," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington, a
scenario that's positive for the dollar.
    Against the yen, the dollar rose 0.4% to 110.26  JPY=EBS .
    The Australian dollar, seen as a liquid proxy for risk appetite, fell to its lowest since November
before recovering somewhat. It was last up 0.4% at US$0.7357  AUD=D3 , while the New Zealand dollar rose
0.9% to US$0.6976  NZD=D3 .
    Australia's two largest states reported sharp increases in new COVID-19 cases on Wednesday, a blow to
hopes that lockdown restrictions would be lifted as more than half the country's population was subject to
stay-at-home orders.  urn:newsml:reuters.com:*:nL1N2OW2NP
    The British pound, which on Tuesday hit its lowest since February, was up 0.6% at $1.3715  GBP=D3 .
    Analysts pointed to a stand-off between Britain and the European Union. Prime Minister Boris Johnson
said his government would outline its approach on the Northern Ireland Protocol to Britain's parliament on
Wednesday. COVID-19 cases in Britain are also surging.  urn:newsml:reuters.com:*:nL9N2M802N[nL1N2OW18W.
    The euro rose 0.2% versus the dollar to $1.1797  EUR=EBS . 
    Currency markets are looking ahead to the European Central Bank's (ECB) meeting on Thursday. A dovish
tone is expected after ECB President Christine Lagarde foreshadowed a guidance tweak in an interview last
week.  urn:newsml:reuters.com:*:nL1N2ON0KB
    In cryptocurrencies, bitcoin rose back above $30,000, having dipped below this key level for the first
time in a month on Tuesday. It last traded up 7.4% at $31,991  BTC=BTSP , while ether surged more than 10%
to $1,971.79.92  ETH=BTSP .
    
    ========================================================
    Currency bid prices at 2:56PM (1856 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index      =USD       92.7500        92.9650     -0.22%         3.077%        +93.1940    +92.7470
 Euro/Dollar       EUR=EBS    $1.1799        $1.1781     +0.15%         -3.43%        +$1.1804    +$1.1752
 Dollar/Yen        JPY=EBS    110.2600       109.8700    +0.36%         +6.72%        +110.3850   +109.8000
 Euro/Yen          EURJPY=    130.09         129.41      +0.53%         +2.50%        +130.1500   +129.1700
 Dollar/Swiss      CHF=EBS    0.9174         0.9213      -0.41%         +3.70%        +0.9231     +0.9175
 Sterling/Dollar   GBP=D3     $1.3715        $1.3628     +0.64%         +0.39%        +$1.3721    +$1.3593
 Dollar/Canadian   CAD=D3     1.2559         1.2680      -0.95%         -1.37%        +1.2729     +1.2526
 Aussie/Dollar     AUD=D3     $0.7357        $0.7329     +0.40%         -4.35%        +$0.7360    +$0.7290
 Euro/Swiss        EURCHF=    1.0825         1.0851      -0.24%         +0.17%        +1.0857     +1.0825
 Euro/Sterling     EURGBP=    0.8602         0.8641      -0.45%         -3.75%        +0.8658     +0.8600
 NZ                NZD=D3     $0.6972        $0.6917     +0.87%         -2.84%        +$0.6977    +$0.6894
 Dollar/Dollar                                                                                    
 Dollar/Norway     NOK=D3     8.8720         9.0000      -1.39%         +3.35%        +9.0540     +8.8750
 Euro/Norway       EURNOK=    10.4693        10.6107     -1.33%         +0.02%        +10.6478    +10.4680
 Dollar/Sweden     SEK=       8.6834         8.6878      -0.03%         +5.94%        +8.7334     +8.6836
 Euro/Sweden       EURSEK=    10.2459        10.2494     -0.03%         +1.68%        +10.2656    +10.2318
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates    https://tmsnrt.rs/2RBWI5E
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 (Reporting by Gertrude Chavez-Dreyfuss; Editing by Joe Bavier, Kirsten Donovan, Andrea Ricci and Angus
MacSwan)
 ((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters Messaging:
rm://gertrude.chavez.reuters.com@reuters.net))

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