FOREX-Dollar at one-week highs on safety bid, euro struggles

* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Saikat Chatterjee
LONDON, Jan 26 (Reuters) - The dollar climbed to a one-week
high against its rivals on Tuesday as doubts over the speed and
size of U.S. stimulus discouraged risk-taking ahead of this
week's Federal Reserve policy meeting.
Early London trading had a broadly cautious tone, with
currencies including the Australian dollar and the euro under
selling pressure.
The single currency was further weighed down by early
signals that the economy may not rebound as strongly this year
as predicted. Germany's Ifo business climate indicator undershot
expectations on Monday and an economic surprise index in Europe
.CESIEUR is hovering near six-week lows.
"The U.S. economy is probably somewhat stronger than some of
the other major economies," said John Vail, chief global
strategist at Nikko Asset Management in Tokyo.
"People will start to think the United States will settle
down, which in theory could be dollar-supportive."
Against a basket of its rivals =USD , the dollar rose 0.2%
to 90.65, its highest level since Jan. 20. It has strengthened
1.6% in three weeks thanks to rising U.S. Treasury yields, after
a 6% drop between September and January.
U.S. Senate Majority Leader Chuck Schumer said Democrats may
try to pass much of President Joe Biden's $1.9 trillion spending
package with a majority vote, but it is not clear if they have
the numbers to override Republican objections. Few if any changes are expected to the Fed's policy
statement on Wednesday after its two-day meeting and no new
economic forecasts are scheduled to be released. The dollar's bounce overnight has also been aided by some
unwinding of large short bets. Short dollar positions
0#NETUSDFX= had hit their highest in almost 10 years, data
last week showed.
The euro EUR=EBS , which fell on Monday after the Ifo
survey showed German business morale slumping, is also trading
in a range between support around $1.2050 and resistance at
$1.2215. It slipped 0.2% to $1.2126.
Tight liquidity supported the Chinese yuan. One-year onshore
yuan forwards CNY1Y=CFXS rose to their highest levels of 2021,
while the onshore spot price CNY= edged up 0.1% to 6.4733.
CNY/
Elsewhere, emerging market currencies remained under
pressure with the Brazilian real BRL= and the Mexican peso
MXN= stabilising after a sharp selloff in the past 48 hours.

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World FX rates https://tmsnrt.rs/2RBWI5E
FX market positions https://tmsnrt.rs/2Yhdyvu
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