July 16, 2018 / 4:26 PM / 3 months ago

REFILE-FOREX-Dollar retreats as investors reset bets ahead of Powell's testimony

 (Fixes typographical error in first paragraph to make it
"posting" instead of "posted")
    * U.S. retail sales rise in June
    * Investors look to Powell testimony
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 16 (Reuters) - The dollar fell on Monday
after posting its largest weekly gain in a month last Friday, as
investors pared back their long bets on the greenback and
rebalanced their positions ahead of Federal Reserve Chairman
Jerome Powell's first congressional testimony.
    Investors are awaiting Powell's semiannual testimony on the
economy and monetary policy before the U.S. Senate Banking
Committee on Tuesday. Powell is likely to reiterate the Fed's
gradual monetary policy tightening, but any suggestion of
caution on trade could unravel the market's appetite for risk
again, analysts said.
    "The market is just paring back its long dollar positioning,
looking to go neutral ahead of Powell's testimony," said Mazen
Issa, senior FX strategist at TD Securities in New York.
    The dollar has benefited from expectations of further
interest rate increases this year as well as a growing belief
that the United States is better placed than it major rivals to
withstand a potential disruption in global trade.
    "While a trade war is unlikely to produce any winners, the
U.S. economic and monetary policy cycles are likely less
sensitive to risks around trade than the euro zone, UK, and
Asian economies," said Omer Esiner, chief market analyst at
Commonwealth Foreign Exchange in Washington.
    Outstanding U.S. dollar bets are at their highest levels
since March 2017, with the latest weekly data showing yet
another increase in positions. Speculators were net long dollars
for a fourth consecutive week, after being net short for 48
straight weeks.
    In late morning trading, the dollar fell 0.2 percent against
a basket of six major currencies to 94.526, sliding for a
second straight session.
    The dollar briefly pared losses after data showed U.S.
retail sales rose 0.5 percent in June, as households boosted
purchases of automobiles and a range of other goods.

    The uptrend on the dollar remained intact.
    Since hitting a more than three-year low against a basket of
six major currencies in February, the dollar has gained
nearly 8 percent.
    The dollar's growing inverse correlation with global risk
appetite has also fueled a near 6 percent rise in the greenback
over the last three months. Monday's bounce in European stocks
led by strong results from Deutsche Bank, snapped
that trend.
    A rebound in global risk appetite on Monday, despite some
tepid Chinese economic data, has dampened fears about an
escalating trade conflict between Beijing and Washington and
boosted higher-yielding currencies.
    The euro rose 0.2 percent against the dollar to
$1.1709 after weakening half a percent last week.
    
========================================================
    Currency bid prices at 12:20PM (1620 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1709        $1.1685     +0.21%         -2.41%      +1.1725     +1.1676
 Dollar/Yen       JPY=        112.2800       112.3600    -0.07%         -0.35%      +112.5500   +112.2100
 Euro/Yen         EURJPY=     131.47         131.27      +0.15%         -2.75%      +131.7000   +131.1000
 Dollar/Swiss     CHF=        0.9972         1.0016      -0.44%         +2.33%      +1.0024     +0.9964
 Sterling/Dollar  GBP=        1.3231         1.3232      -0.01%         -2.08%      +1.3292     +1.3224
 Dollar/Canadian  CAD=        1.3124         1.3159      -0.27%         +4.35%      +1.3162     +1.3109
 Australian/Doll  AUD=        0.7416         0.7423      -0.09%         -4.96%      +0.7442     +0.7408
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1676         1.1703      -0.23%         -0.11%      +1.1714     +1.1677
 Euro/Sterling    EURGBP=     0.8849         0.8831      +0.20%         -0.39%      +0.8852     +0.8816
 NZ Dollar/Dolar  NZD=        0.6767         0.6763      +0.06%         -4.50%      +0.6793     +0.6759
 Dollar/Norway    NOK=        8.1042         8.1127      -0.10%         -1.28%      +8.1245     +8.0825
 Euro/Norway      EURNOK=     9.4878         9.4803      +0.08%         -3.66%      +9.4935     +9.4711
 Dollar/Sweden    SEK=        8.8226         8.8820      -0.51%         +7.57%      +8.8937     +8.8114
 Euro/Sweden      EURSEK=     10.3300        10.3829     -0.51%         +4.99%      +10.3857    +10.3230
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; additional reporting by
Saikat Chatterjee in London; editing by Jonathan Oatis)
  
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