FOREX-Dollar drops in choppy trading, investors rebalance for month-end

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Adds quotes, updates prices; previous LONDON)
By Karen Brettell
NEW YORK, Jan 28 (Reuters) - The safe-haven U.S. dollar fell
on Thursday in choppy trading and riskier currencies including
the Australian dollar reversed earlier losses as stocks
rebounded, and as investors repositioned portfolios for
month-end.
The dollar was boosted by safety buying earlier this week on
concerns that U.S. fiscal stimulus will not be as large as
originally hoped, and due to the continuing spread of COVID-19
as countries struggle to roll out vaccines.
But it gave up earlier gains on Thursday as stocks rose,
boosted by a reversal of declines in mega-cap technology stocks.
.N
That came even after data on Thursday showed that the U.S.
economy contracted at its sharpest pace since World War Two in
2020 as COVID-19 ravaged services businesses like restaurants
and airlines, throwing millions of Americans out of work and
into poverty. “There's such a tug of war right now between the longer-term
momentum…and the shorter-term term phenomenon of maybe a dollar
short squeeze,” said Erik Nelson, a macro strategist at Wells
Fargo in New York.
The dollar has rebounded from three-year lows reached
earlier this month, with the recent decline viewed as having run
too far too fast.
The dollar index against a basket of currencies =USD is up
0.50% this month after falling more than 6% last year. It was
last down 0.22% on the day at 90.46.
This week investors also have been rebalancing portfolios
for month-end, which has boosted demand for the U.S. currency.
“Of late its really been a position rebalance story,” said
Bipan Rai, North American head of FX strategy at CIBC Capital in
Toronto. “The market's still pretty short dollars, I would say
that the last little while has really been driven by that
theme.”
The Australian dollar AUD=D3 gained 0.08% to $0.7669,
after earlier falling to $0.7590, the lowest since Dec. 29.
The greenback fell 0.06% against the Canadian dollar to
1.2799 Canadian dollars CAD=D3 , after earlier rising to a
month-month high of 1.2881.
The euro EUR=EBS was last up 0.19% at $1.2136, reversing
earlier losses.
The euro has been dented as European Central Bank (ECB)
policymakers step up their mentions of the euro, with the most
recent comments indicating that the ECB could even cut its
deposit rate to check the strength of the continent's shared
currency.
“We're starting to hear more rhetoric from the ECB that
leads me to believe that they're going to be a little bit more
active with respect to euro appreciation,” said Rai.
Bitcoin BTC=BTSP gained 5.45% to $32,070, after briefly
dipping below $30,000 on Wednesday.

Currency bid prices at 10:25AM (1525 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Dollar index =USD 90.4470 90.6690 -0.24% +0.00% +90.8590 +90.4220
Euro/Dollar EUR=EBS $1.2136 $1.2114 +0.19% -0.67% +$1.2142 +$1.2081
Dollar/Yen JPY=D3 104.2850 104.0900 +0.25% +1.03% +104.4550 +104.1500
Euro/Yen EURJPY= 126.55 126.07 +0.38% -0.29% +126.6600 +126.0000
Dollar/Swiss CHF=EBS 0.8874 0.8889 -0.19% +0.29% +0.8918 +0.8873
Sterling/Dollar GBP=D3 $1.3722 $1.3692 +0.24% +0.46% +$1.3727 +$1.3631
Dollar/Canadian CAD=D3 1.2799 1.2806 -0.06% +0.50% +1.2880 +1.2790
Aussie/Dollar AUD=D3 $0.7669 $0.7664 +0.08% -0.29% +$0.7676 +$0.7592
Euro/Swiss EURCHF= 1.0768 1.0761 +0.07% -0.36% +1.0789 +1.0753
Euro/Sterling EURGBP= 0.8842 0.8848 -0.07% -1.06% +0.8884 +0.8843
NZ NZD=D3 $0.7165 $0.7159 +0.11% -0.20% +$0.7171 +$0.7106
Dollar/Dollar
Dollar/Norway NOK=D3 8.6065 8.6650 -0.73% +0.17% +8.7275 +8.6020
Euro/Norway EURNOK= 10.4465 10.4705 -0.23% -0.20% +10.5530 +10.4415
Dollar/Sweden SEK= 8.3324 8.3523 -0.19% +1.64% +8.3990 +8.3223
Euro/Sweden EURSEK= 10.1105 10.1294 -0.19% +0.34% +10.1495 +10.1040