FOREX-Dollar rally resumes as U.S.-China tensions escalate; Swiss franc falls

* Dollar index rises 0.1%
* U.S. fiscal stimulus boosts dollar
* Sino-U.S. tensions keep currency markets subdued
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

(Updates prices, adds commentary and graph)
By Elizabeth Howcroft
LONDON, Aug 10 (Reuters) - The dollar strengthened on
Monday, including against the euro and the Swiss franc, as
investors focused on fiscal stimulus in the United States and
U.S.-China tensions ahead of key trade talks on Aug. 15.
The dollar index is recovering from a losing streak which
saw it lose 4% in July. It picked up on Friday after jobs data
calmed some fears about the U.S. labour market but still
weakened on the week, for the seventh in a row. After talks in Washington over the next round of fiscal
stimulus broke down, U.S. President Donald Trump signed
executive orders on Saturday, partially restoring enhanced
unemployment payments to tens of millions of jobless Americans.
The dollar index held steady in the Asian session but rose
in early London trading on Monday, and was up 1% at 93.532 at
1008 GMT =USD .
"A little stimulus is simply better than none at all," wrote
Commerzbank analyst Thu Lan Nguyen.
"At least that is how the market seems to see it, which is
why the U.S. dollar is trading moderately stronger," she added.
Speculators increased their net short dollar positions in
the latest week, according to weekly futures data on
Friday. The dollar's strength at the end of last week was also due
to escalating tensions between the United States and China, with
the U.S. imposing sanctions on top Hong Kong and Chinese
officials. This continued to drive investors towards the safe-haven
dollar on Monday. China imposed sanctions on 11 U.S. citizens,
including legislators. Prominent democracy activist, Hong Kong media tycoon Jimmy
Lai, was arrested on Monday under China's new national security
law in the territory, while U.S. health chief Alex Azar visited
Taiwan on Sunday - a trip condemned by China which claims the
island as its own. Senior U.S. and Chinese officials will meet via
teleconference on Saturday to review the implementation of their
Phase 1 trade deal and likely air mutual grievances.
The euro was down 0.2% versus the dollar, at $1.17605
EUR=EBS .
The Swiss franc fell versus the dollar, down 0.4% at 0.9159.
Euro-franc was up 0.2% at 1.0773 ERCHF=EBS .
The Swiss National Bank sight deposits rose in the week
ending Aug. 7. A rise in sight deposits can indicate central
bank intervention in foreign exchange markets to weaken the
franc. "It looks then like Europeans are buying euros vs their
currencies, particularly vs CHF, while the U.S. is buying
EUR/USD," wrote Marshall Gittler, head of investment research at
BDSwiss Group.
Overnight data showed China's industrial activity picked up
in July, boosting hopes for an economic recovery and driving
early gains in European stocks. The Norwegian crown gained versus the dollar, up around 0.4%
at 9.0285 NOK=D3 .
The New Zealand dollar was down 0.2% versus the dollar, at
0.6585 NZD=D3 .
The Australian dollar was subdued, down 0.1% versus the U.S.
dollar at 0.71525 AUD=D3 after the country recorded a
record-high daily increase in COVID-19 deaths on Monday. Prime
Minister Scott Morrison said internal border closures were
unlikely to be lifted before Christmas. Australia's central bank downgraded its outlook for the
national economy on Friday and warned unemployment would stay
high for several years. <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
U.S. Dollar Index & CFTC Positions https://tmsnrt.rs/31zchBe
^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>