FOREX-Dollar falls to 27-month low as U.S. stocks hit record highs

* Dollar index, eurodollar hit 27-month lows
* CAD hits seven-month high
* Yen, pound rise versus dollar
* S&P 500 index hits record high

(New throughout)
By Kate Duguid
NEW YORK, Aug 18 (Reuters) - The U.S. dollar index fell to
its lowest in more than two years on Tuesday as the ongoing
effects of the Federal Reserve's stimulus programs weakened the
greenback broadly for the fifth consecutive day and lifted U.S.
stock indexes to record highs.
Although the dollar often functions as a safe-haven
investment in moments of crisis, it has fallen since the Federal
Reserve's intervention into financial markets to maintain
liquidity in the midst of the coronavirus pandemic. The Fed's
programs have pushed risk assets to all-time highs and reduced
demand for safe-havens, even as economic data has painted a
bleak picture of the U.S. recovery.
The dollar index =USD was last down 0.55% at 92.308,
having earlier hit a bottom of 92.124, its lowest since May
2018. Against the euro EUR= , the dollar also hit its lowest
since May 2018 at $1.197.
The dollar was also weaker against the Japanese yen JPY= ,
another traditional safe-haven, having hit a two-week low of
105.27 yen per dollar.
"It's the Fed, it's all the liquidity being pumped into the
market," said Greg Anderson, global head of foreign exchange
strategy at BMO Capital Markets, about the fall in the dollar.
A fresh rally in tech stocks provided a positive backdrop
for markets and drove the S&P 500 index .SPX to a record high,
topping the last record hit on Feb. 19 and further underlining
the disconnect between the stock market and U.S. economic data.
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Anderson noted that the Tuesday's dollar weakness was not
the result of any specific data release, but about a move lower
that has been gaining momentum.
"Once U.S. dollar momentum becomes entrenched, it's like
trying to turn around an aircraft carrier, it is tough to do.
And I think the momentum is entrenched," he said.
Net bearish bets on the greenback rose to their largest
since May 2011 last week, and spot trade in recent days suggests
the position has only grown further since. Elsewhere in North America, the Canadian dollar CAD=
strengthened to $1.315, its best versus the greenback since late
January. The move came after Canadian Prime Minister Justin
Trudeau appointed his close ally and deputy Chrystia Freeland as
finance minister on Tuesday as he revamps pandemic recovery
plans. "(Bill) Morneau has been a very solid finance minister. In a
lot of situations, to lose that would be a bit destabilizing.
But in this particular instance, Chrystia Freeland has also done
a remarkable job with her file," said Anderson.