FOREX-Dollar retreats from two-month high as stocks rally

(Updates prices, adds commentary, changes byline, previous
dateline London)
* Dollar off two-month high after best week in almost six
months
* Big net short dollar position points to chance of further
rise
* Euro bounces from two-month low
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Chuck Mikolajczak
NEW YORK, Sept 28 (Reuters) - The dollar pulled back from a
two-month high against a basket of currencies on Monday as
equities rallied after four straight weeks of declines ahead of
a slew 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
bounced after four straight weeks of declines. 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.
"Unless the labor market has a really terrible number this
week, if it is steady we might not get stimulus until after the
election so I don’t think anyone is holding their breath on that
right now," said Edward Moya, senior market analyst at OANDA in
New York.
"If the stocks are rising, in this current time you can’t
have a stronger dollar and that is going to continue to be the
case but you are going to see choppy trade this week."
The dollar index slipped as low as 94.155 and last
fell 0.36%, on pace for its biggest daily percentage drop in a
month. 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 $1.2884, up 1.16% on
hopes Britain could secure a Brexit trade deal with the EU.
The euro gained 0.34% to $1.1669 after dropping to
$1.16125 on Friday, its lowest in two months.
Friday's data on U.S. currency futures positions also
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 higher.
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.
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 10:16AM (1416 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1669 $1.1630 +0.34% +4.09% +1.1678 +1.1616
Dollar/Yen JPY= 105.4500 105.6000 -0.14% -3.13% +105.6800 +105.2700
Euro/Yen EURJPY= 123.06 122.76 +0.24% +0.93% +123.1500 +122.4000
Dollar/Swiss CHF= 0.9275 0.9284 -0.10% -4.16% +0.9295 +0.9256
Sterling/Dollar GBP= 1.2884 1.2736 +1.16% +0.00% +1.2925 +1.2747
Dollar/Canadian CAD= 1.3361 1.3384 -0.17% +0.00% +1.3403 +1.3361
Australian/Doll AUD= 0.7069 0.7027 +0.60% +0.00% +0.7074 +0.7009
ar
Euro/Swiss EURCHF= 1.0825 1.0801 +0.22% -0.26% +1.0826 +1.0789
Euro/Sterling EURGBP= 0.9055 0.9123 -0.75% +7.13% +0.9124 +0.9027
NZ NZD= 0.6558 0.6542 +0.24% -2.64% +0.6567 +0.6530
Dollar/Dollar
Dollar/Norway NOK= 9.4693 9.5720 -1.07% +7.87% +9.5899 +9.4575
Euro/Norway EURNOK= 11.0530 11.1346 -0.73% +12.35% +11.1556 +11.0419
Dollar/Sweden SEK= 9.0477 9.1281 -0.48% -3.21% +9.1429 +9.0448
Euro/Sweden EURSEK= 10.5588 10.6096 -0.48% +0.87% +10.6295 +10.5560


(Reporting by Chuck Mikolajczak; Editing by Hugh Lawson)