FOREX-Dollar dips after bounce US GDP awaited for potential support

Reuters

* USD loses momentum; U.S. GDP data may provide more impetus
    * U.S. economic growth expected to have accelerated in Q2
    * Euro/dollar pulls away from 2-1/2-year high
    * Swiss franc extends losses vs euro, weakest since Jan 2015

 (Adds details and quotes, updates prices)
    By Shinichi SaoshiroTOKYO, July 28 (Reuters) - The dollar dipped against its
major peers on Friday, its mild bounce earlier petering out
ahead of the second quarter U.S. economic growth data due later
in the session.
    The dollar index against a basket of six major currencies
was a shade lower at 93.826 <.DXY> after edging up 0.2 percent
the previous day.
    The greenback, which had sunk to a 13-month low midweek
after the Federal Reserve's policy statement suggested it was in
no hurry to raise interest rates again, received a lift on
Thursday as Treasury yields rose on the back of upbeat U.S.
durable goods and trade data. [nL1N1KI0LL]
    Market focus was now on second quarter U.S. gross domestic
product data due at 1230 GMT.
    Economists expect the world's largest economy to have grown
around 2.6 percent in the second quarter, from 1.4 percent in
the first quarter. A solid outcome will no doubt give the
beleaguered dollar some respite from the recent sell-off.
    Dollar bulls have not had much to cheer about recently,
hobbled by investigations into U.S. President Donald Trump
administration's ties to Russia and the reduced likelihood of
tax reform and infrastructure spending being enacted soon.
    "The dollar's fall after the Fed meeting looked overdone, so
it was natural for it to rebound," said Yukio Ishizuki, senior
currency strategist at Daiwa Securities.
    "And the dollar could find more bids if U.S. economic data
turns out to be strong. That said, we are unlikely to see a
return to the days when the dollar was the lone winner, because
other countries are joining the Fed in trying to normalise
monetary policies."
    The euro is one of the currencies that has benefited from
expectations the European Central Bank will begin phasing out
its monetary easing sooner rather than later. It has gained
roughly 11 percent against the dollar so far this year.
    The common currency was last up 0.1 percent at $1.1686
. It had fallen about 0.5 percent overnight, when it was
knocked off a 2-1/2-year high of $1.1777. The euro was on track
to rise 0.2 percent on the week.
    The Swiss franc extended its slide against the buoyant euro,
touching 1.1364 francs per euro . It was the franc's
weakest since January 2015, when the Swiss National Bank (SNB)
removed its cap on the currency.
    "The traditionally close correlation between the euro and
Swiss franc is changing, as expectations that the ECB would
begin tapering its easy policy are becoming very strong," said
Masashi Murata, senior strategist at Brown Brothers Harriman.
    "The SNB, on the other hand, obviously does not want a
strong franc. The policy divergence between the ECB and the SNB
has been overlooked for a while but is now a theme being traded
upon."
    Investors expect the SNB to keep monetary policy loose while
other central banks move towards tightening.
    The dollar was down 0.2 percent at 111.070 yen  to
reverse the previous day's modest gains. It was poised to lose
1.2 percent this week, during which it fell to a six-week low of
110.625.
    The Australian dollar was 0.1 percent higher at $0.7975
.
    The Aussie has advanced strongly as the dollar floundered
through most of the week, soaring to a 26-month high of $0.8066
on Thursday. Higher prices of commodities such as copper and
iron ore have also supported the currency.
    The New Zealand dollar stood at $0.7487  after
rising to $0.7557 on Thursday, its highest since May 2015.

 (Reporting by Shinichi Saoshiro; Editing by Shri Navaratnam and
Jacqueline Wong)
 ((shinichi.saoshiro@thomsonreuters.com; Reuters Messaging:
shinichi.saoshiro.reuters.com@reuters.net)(+813-6441-1774))

Keywords: GLOBAL FOREX/ (UPDATE 1)
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