July 16, 2018 / 2:56 PM / 5 months ago

FOREX-Dollar slides as risk appetite improves

    * U.S. retail sales rise in June
    * Investors look to Powell testimony
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Adds comment, U.S. data, FX table, updates prices, changes
byline, dateline, previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 16 (Reuters) - The dollar fell on Monday,
having posted its largest weekly gain in a month last Friday, as
risk appetite improved, prompting investors to pare back some of
their long bets on the greenback, which has grown substantially
over the last few weeks.
    The positive outlook for the dollar has not changed, however
despite Monday's weakness, analysts said, with growing concerns
about trade tensions and a rebound in U.S. economic data
expected to fuel further demand for the greenback. 
    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.
    The U.S. currency 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.
    In late morning trading, the dollar fell 0.3 percent against
a basket of six major currencies to 94.454, 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 market is just paring back its long dollar positioning,
looking to go neutral ahead of (Federal Reserve Chairman Jerome)
Powell's testimony," said Mazen Issa, senior FX strategist at TD
Securities in New York.
    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 policy, but any suggestion of caution on trade
could unravel the market's appetite for risk again.
    The dollar's growing inverse correlation with global risk
appetite has also fuelled 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 0.3 percent against the dollar to
$1.1714 after weakening half a percent last week. 
    
========================================================
    Currency bid prices at 10:39AM (1439 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1716        $1.1685     +0.27%         -2.33%      +1.1725     +1.1676
 Dollar/Yen       JPY=        112.2800       112.3600    -0.07%         -0.36%      +112.5500   +112.2100
 Euro/Yen         EURJPY=     131.55         131.27      +0.21%         -2.69%      +131.7000   +131.1000
 Dollar/Swiss     CHF=        0.9969         1.0016      -0.47%         +2.32%      +1.0024     +0.9964
 Sterling/Dollar  GBP=        1.3263         1.3232      +0.23%         -1.84%      +1.3292     +1.3225
 Dollar/Canadian  CAD=        1.3127         1.3159      -0.24%         +4.37%      +1.3162     +1.3109
 Australian/Doll  AUD=        0.7429         0.7423      +0.08%         -4.77%      +0.7442     +0.7408
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1680         1.1703      -0.20%         -0.08%      +1.1714     +1.1678
 Euro/Sterling    EURGBP=     0.8832         0.8831      +0.01%         -0.57%      +0.8838     +0.8816
 NZ               NZD=        0.6782         0.6763      +0.28%         -4.29%      +0.6793     +0.6759
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.0933         8.1127      -0.24%         -1.39%      +8.1245     +8.0825
 Euro/Norway      EURNOK=     9.4841         9.4803      +0.04%         -3.70%      +9.4889     +9.4711
 Dollar/Sweden    SEK=        8.8149         8.8820      -0.53%         +7.48%      +8.8937     +8.8114
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; additional reporting by
Saikat Chatterjee in London; editing by Jonathan Oatis)
  
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