FOREX-Dollar falters as stocks rally, risk currencies gain

* Sterling, Aussie and Kiwi dollar gain
* Yen halts 3 days of losses
* Norwegian crown falls
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E

By Ritvik Carvalho
LONDON, Feb 1 (Reuters) - The dollar sank as global stock
markets rallied on Monday, while riskier currencies such as the
British pound, the Australian dollar and New Zealand dollar
rose.
The Japanese yen halted three consecutive days of losses,
gaining on the dollar after hitting its lowest in over two
months last week. JPY=
The U.S. currency declined against most of its peers as
Asian and European stocks rallied following four days of losses.
Earlier the greenback had found support as traders remained
wary that retail investors who had organised online might
continue their assault on hedge fund short positions, sparking
more volatility.
However, the crowd's focus appeared to have shifted squarely
to silver. Spot silver prices XAG= were up nearly 9% in early
London trading on Monday. Strategists at ING said the rise in silver is "a standout"
in a relatively subdued opening for commodity and FX markets
this week.
"Presumably swarmers may find that the depth in global
commodity markets means that retail buying may have less of an
impact here than it does on a single stock," they said in a note
to clients.
"Equally if turning their attention to FX markets, where
speculators are heavily short dollars, swarmers may struggle to
rationalise a long silver and a long dollar recommendation."
Against a basket of peers, the dollar =USD traded flat.
The index that measures its strength has been largely
range-bound in recent weeks, after bouncing from a nearly
three-year low of 89.206 at the start of the year.
The pound was the biggest gainer in the G10 group of
currencies, up 0.3% on the day at $1.3732. GBP=D3
The yen traded flat at 104.76 yen per dollar. JPY=
The Australian and New Zealand dollars traded flat, giving
up some gains by 0839 GMT.
The euro fell 0.2% to trade at $1.2111 EUR=EBS
Elsewhere, the Norwegian crown fell half a percent against
the dollar to 8.5796 crowns per dollar. NOK=
Jens Naervig Pedersen, chief analyst for FX and rates
strategy at Danske Bank, noted the Norway central bank's Friday
announcement of a substantial increase in the daily pace of its
fiscal Norwegian crown buying from 800 million crowns in January
to 1,700 million in February.
While an increase was expected, its size was a surprise, he
said, with the implications of the announcement two-fold.
"First, it means the Norges Bank will buy 18 billion more
NOK in February than in January, which adds a flow supportive
argument to NOK after a week where the stagnating reflation
theme weighed," he said.
"Secondly, the larger NOK buying pace will drain liquidity
from the interbank market, which puts upward pressure on NOK
FRA/OIS spreads. By extension, this will improve the carry case
of a long NOK position."

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