* Dollar down for third straight session
* Euro up on ebbing Italy political turmoil
* Commodity currencies - Aussie, Kiwi, Norwegian crown up
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Ritvik Carvalho
LONDON, Jan 20 (Reuters) - The dollar sank against a basket
of currencies for a third straight session on Wednesday as
improved sentiment buoyed riskier currencies such as the Aussie
dollar and the euro.
The Australian dollar was the biggest mover in the G10 group
of currencies, gaining half a percent to $0.7734 AUD=D4 . The
New Zealand dollar was a close second, up 0.35% at $0.7140
NZD=D4
Ebbing political turmoil in Italy, with Prime Minister
Giuseppe Conte winning a crucial vote to stay in power, helped
lift the euro to $1.2158, already buoyant on a survey that
showed improving investor sentiment in Germany. While the world will be watching Joe Biden's inauguration as
U.S. President at noon in Washington (1700 GMT), traders were
more focused on his policies than the ceremony.
"Authorities have warned of possible armed protests across
the country, which might cool the markets' upbeat mood (stock
futures point to another positive open), but the muted market
reaction to the Capitol riots on 6 January suggests most assets
– including the dollar - may end up being only marginally
influenced by any episode of social unrest today," ING said in a
note to clients.
U.S. Treasury Secretary nominee Janet Yellen urged lawmakers
to "act big" on stimulus spending at her confirmation hearing
and said she believes in market-determined exchange rates,
without expressing a view on the dollar's direction.
The index that measures the dollar's strength against a
basket of peers was down 0.1% at 90.390 =USD
While the dollar has perked up in recent weeks on the back
of a rise in U.S. Treasury yields, investors still expect the
currency to weaken.
"We remain bearish U.S. dollar, and expect the downtrend to
resume as U.S. real yields top out," said Ebrahim Rahbari, FX
strategist at CitiFX.
"Continued Fed dovishness remains important for our view, in
addition to global recovery, so we'll watch upcoming Fed-speak
closely."
Positioning data shows investors overwhelmingly short
dollars as they figure budget and current account deficits will
weigh on the greenback. 0#NETUSDFX=
UBS Global Wealth Management's chief investment officer Mark
Haefele reiterated a bearish view on the dollar, noting that
pro-cyclical currencies like the euro, commodity-producer
currencies, and the pound would benefit "from a broadening
economic recovery supported by vaccine rollouts".
Sterling traded 0.2% higher to the dollar at $1.3668
GBP=D3 , up for a third straight day.
Cryptocurrency Bitcoin fell 1%, trading at $35,529.
BTC=BTSP
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World FX rates https://tmsnrt.rs/2RBWI5E
Dollar positioning https://tmsnrt.rs/35VsqEj
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