FOREX-U.S. dollar on track for second week of gains; Fed meeting in focus

Reuters

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    * U.S. dollar gives back the week's gains as COVID-19 fears ease
    * Greenback rally may be losing steam -analyst
    * Euro softer after ECB pledged record low rates for longer
    * Aussie on course for fourth weekly slide as lockdowns weigh

 (Adds new analyst comment, FX table, dateline, updates prices)
    By Gertrude Chavez-Dreyfuss and Ritvik Carvalho
    NEW YORK/LONDON, July 23 (Reuters) - The U.S. dollar was on course on Friday for a second week of gains
after a turbulent few days when currencies were buffeted by shifting risk appetite, with the market's focus
now on next week's Federal Reserve meeting.
    Some analysts wondered, though, whether the dollar's recent rally may be losing momentum.
    The dollar index  =USD , which measures the greenback against a basket of six major currencies, was
slightly higher on the day at 92.877. For the week, it is up 0.2%, after rising 0.6% previously.
    But that was off a 3-1/2-month high of 93.194 hit on Wednesday, after strong Wall Street earnings helped
investors regain some confidence amid earlier worries that the Delta coronavirus variant could derail the
global recovery.
    Risk appetite among investors remained high on Friday, with U.S. stocks rising, U.S. Treasuries selling
off, most commodity currencies well-bid on the day, and the greenback off its peaks.
    "The dollar looks tired especially after the rally of the last few weeks," said Erik Nelson, macro
strategist, at Wells Fargo Securities in New York. "It seems to be running out of steam both from a
fundamental and technical perspective."
    So far in July, the dollar has gained 0.6%, after rising 2.8% in June.
    Wells Fargo's Nelson, however, was not convinced the dollar could hold its gains in the coming weeks
given the decline in U.S. Treasury yields. 
    Since the beginning of July, U.S. benchmark 10-year Treasury yields  US10YT=RR  have lost 16 basis
points, on track for their largest monthly fall since March 2020.
    "You had a huge move lower in U.S. rates. I also think the Fed is going to be one of the laggards among
central banks normalizing policy," Nelson said.
     The market's next major focus is the Fed's two-day policy meeting next week. Since the previous meeting
on June 16, when Fed officials dropped a reference to the coronavirus as a weight on the economy, cases have
risen.  urn:newsml:reuters.com:*:nL1N2OW0XI
    Many economists, however, still expect the meeting to advance discussions for a tapering of stimulus.
    Against the safe-harbour yen  JPY=EBS , the dollar rose 0.3% to 110.53 yen.
    Meanwhile, the euro  EUR=EBS  was down 0.1% at $1.1763, showing little reaction to the purchasing
manager surveys coming out of France, Germany and the euro zone as a whole.  
    Euro zone business activity expanded at its fastest monthly pace in over two decades in July as the
loosening of more COVID-19 restrictions gave a boost to services, but fears of another wave of infections
hit business confidence.  urn:newsml:reuters.com:*:nZRN002DOC  urn:newsml:reuters.com:*:nZRN002DOH  urn:newsml:reuters.com:*:nL8N2OZ22G
    The data came in the wake of the European Central Bank's meeting on Thursday, in which it pledged to
keep interest rates at record lows for even longer.
    The Australian dollar  AUD=D3  - viewed as a proxy for risk appetite - slid 0.1% to US$0.7374, heading
for a fourth straight weekly loss.
    With half the Australian population under lockdown, economists said the country's central bank could
increase stimulus rather than decrease it at its next policy meeting.
    
    ========================================================
    Currency bid prices at 9:59AM (1359 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
                                              Session                                             
 Dollar index      =USD       92.9370        92.8310     +0.12%         3.285%        +93.0280    +92.7770
 Euro/Dollar       EUR=EBS    $1.1765        $1.1771     -0.05%         -3.70%        +$1.1787    +$1.1755
 Dollar/Yen        JPY=EBS    110.4150       110.1550    +0.23%         +6.86%        +110.5850   +109.9200
 Euro/Yen          EURJPY=    129.90         129.65      +0.19%         +2.35%        +130.1800   +129.6300
 Dollar/Swiss      CHF=EBS    0.9206         0.9192      +0.15%         +4.06%        +0.9222     +0.9187
 Sterling/Dollar   GBP=D3     $1.3752        $1.3769     -0.13%         +0.66%        +$1.3779    +$1.3720
 Dollar/Canadian   CAD=D3     1.2588         1.2555      +0.28%         -1.13%        +1.2593     +1.2552
 Aussie/Dollar     AUD=D3     $0.7372        $0.7384     -0.16%         -4.17%        +$0.7400    +$0.7359
 Euro/Swiss        EURCHF=    1.0829         1.0819      +0.09%         +0.20%        +1.0841     +1.0817
 Euro/Sterling     EURGBP=    0.8555         0.8547      +0.09%         -4.27%        +0.8584     +0.8547
 NZ                NZD=D3     $0.6976        $0.6975     +0.02%         -2.85%        +$0.6992    +$0.6961
 Dollar/Dollar                                                                                    
 Dollar/Norway     NOK=D3     8.8730         8.8495      +0.00%         +3.06%        +8.8790     +8.8355
 Euro/Norway       EURNOK=    10.4405        10.4076     +0.32%         -0.26%        +10.4498    +10.4065
 Dollar/Sweden     SEK=       8.6939         8.6771      +0.11%         +6.07%        +8.6982     +8.6723
 Euro/Sweden       EURSEK=    10.2270        10.2160     +0.11%         +1.49%        +10.2325    +10.2068
 
    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
World FX rates    https://tmsnrt.rs/2RBWI5E
Dollar set for second week of gains    https://tmsnrt.rs/3BztCLN
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Gertrude Chavez-Dreyfuss in New York and Ritvik Carvalho in London
Editing by Pravin Char and Mark Potter)
 ((gertrude.chavez@thomsonreuters.com; 646-301-4124; Reuters Messaging:
rm://gertrude.chavez.reuters.com@reuters.net))

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