* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Sept 20 (Reuters) - The U.S. dollar erased earlier
losses and rose on Friday after investors cut back short
positions in the greenback as concerns about slower global
growth prospects and political tensions boosted its safe-haven
appeal.
The dollar weakened after the Federal Reserve cut interest
rates by a quarter-point on Wednesday and the currency's decline
was compounded by a spike in overnight U.S. repo rates that cut
into demand for dollars.
But market watchers say the slowdown in global growth and
increased tensions following the weekend attacks on Saudi oil
facilities were making the dollar more attractive, despite a
dovish policy stance from policymakers.
"As long as the outlook for global growth remains uncertain
and geopolitical tensions don't ease, we expect the current
trends in the FX market will continue," said Richard Falkenhall,
a senior FX strategist at SEB. "Our forecasts point to further
USD strength, while smaller currencies remain weak this year."
The dollar rebounded 0.1% against an index of other
currencies .DXY to 98.39, ending a two-week losing streak. It
had fallen 0.1% in early London trading.
Markets focused on U.S.-China trade talks in Washington,
taking place ahead of high-level discussions next month. Some
signs of progress were emerging.
Sterling was briefly the biggest gainer against the dollar
before profit taking ahead of the weekend pulled the British
pound lower.
European Commission President Jean-Claude Juncker said on
Thursday he thought Brussels could reach agreement with Britain
on its departure from the European Union. In early trading, the pound rose 0.5% to a two-month high
against the dollar GBP=D3 and to a four-month high against the
euro of 87.87 pence EURGBP=D3 , but then gave up its gains to
trade broadly flat on the day. The Australian dollar AUD=D3 rose to $0.6799 but remained
near the three-week low it reached on Thursday. The New Zealand
dollar NZD=D3 fell to $0.6285, its weakest since Sept. 3.
FX market positions https://tmsnrt.rs/30att1o
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