FOREX-Dollar eases from two-month high as equities rally

 (Updates prices, adds commentary, changes byline, previous
dateline London)
    * Dollar off two-month high after best week in almost six
    * Big net short dollar position points to chance of further
    * Euro bounces from two-month low
    * Graphic: World FX rates in 2020

    By Chuck Mikolajczak
    NEW YORK, Sept 28 (Reuters) - The dollar retreated from a
two-month high against a basket of currencies on Monday as
equities rallied after four straight weeks of declines ahead of
a busy week of economic data and political developments in the
United States. 
   A rebound in U.S. stocks at the end of last week helped slow
the climb of the dollar, considered a safe haven, but signs of a
slowdown in the nascent recovery from the pandemic and political
uncertainties have kept investors on the defensive.
    Major indexes on Wall Street were up more than 1% as stocks
rebounded following four straight weeks of declines, the longest
such streak for the S&P 500 and Dow Industrials (.DJI> in
over a year.
    "The dollar as of several months ago has been trading in
tandem with the equity markets, when equities goes up, the
dollar goes down," said Axel Merk, president of Merk Investments
and portfolio manager of the Merk Hard Currency Fund in Palo
Alto, California. 
    "The dollar has been acting like a funding currency,
basically when the world is reflating, when risk assets go up,
when equities go up, then the dollar is weakening." 
    The dollar index slipped as low as 94.155 on the day
and last fell 0.317%, on pace for its biggest daily percentage
drop in about three weeks. The greenback reached a two-month
high of 94.745 last week and posted its biggest weekly rise
since early April. Against the yen, the dollar was more subdued
at 105.45 yen.
    Sterling was last trading at $1.2849, up 0.89% on
hopes Britain could secure a Brexit trade deal with the EU.

    The euro gained 0.31% to $1.1666 after dropping to
$1.16125 on Friday, its lowest in two months. 
    Even with Monday's softening, Friday's data on U.S. currency
futures positions suggested the dollar had room to rise further,
with speculators holding a big net short position in the
currency which they could move to cover if the dollar moves
    U.S. Commodity Futures Trading Commission's broad measure of
dollar positioning showed speculators' net short position rose
to $33.989 billion last week, up from $31.524
billion the week before and near its highest in almost a decade.

    The flip side of that was a large net long position in the
euro, which inched up last week to $27.922 billion.
    Investor attention may now turn to the first U.S.
presidential debate on Tuesday. 
    Meanwhile, worries abound that the economic recovery is
stalling as many stimulus programs have expired, curbing
consumer spending. On Sunday, U.S. House Speaker Nancy Pelosi
said she thought a deal could be reached with the White House on
a fresh coronavirus relief package as talks continued.

    This week will bring more data on the health of the world's
biggest economy, including consumer confidence on Tuesday, a
manufacturing survey and consumer data on Thursday, and jobs
figures on Friday.
    Currency bid prices at 2:44PM (1844 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1666        $1.1630     +0.31%         +4.07%      +1.1678     +1.1616
 Dollar/Yen       JPY=        105.5100       105.6000    -0.09%         -3.08%      +105.6800   +105.2700
 Euro/Yen         EURJPY=     123.09         122.76      +0.27%         +0.93%      +123.1500   +122.4000
 Dollar/Swiss     CHF=        0.9239         0.9284      -0.48%         -4.54%      +0.9295     +0.9243
 Sterling/Dollar  GBP=        1.2849         1.2736      +0.89%         -3.09%      +1.2925     +1.2747
 Dollar/Canadian  CAD=        1.3368         1.3384      -0.12%         +2.94%      +1.3403     +1.3353
 Australian/Doll  AUD=        0.7074         0.7027      +0.67%         +0.75%      +0.7074     +0.7009
 Euro/Swiss       EURCHF=     1.0782         1.0801      -0.18%         -0.65%      +1.0829     +1.0774
 Euro/Sterling    EURGBP=     0.9078         0.9123      -0.49%         +7.38%      +0.9124     +0.9056
 NZ               NZD=        0.6558         0.6542      +0.24%         -2.64%      +0.6567     +0.6530
 Dollar/Norway    NOK=        9.4698         9.5720      -1.07%         +7.88%      +9.5899     +9.4575
 Euro/Norway      EURNOK=     11.0480        11.1346     -0.78%         +12.30%     +11.1556    +11.0387
 Dollar/Sweden    SEK=        9.0417         9.1281      -0.56%         -3.27%      +9.1429     +9.0248
 Euro/Sweden      EURSEK=     10.5501        10.6096     -0.56%         +0.77%      +10.6295    +10.5300
 (Reporting by Chuck Mikolajczak; 
Editing by Bernadette Baum)