FOREX-Dollar rises as investors take refuge ahead of Fed

(New throughout; changes byline, dateline, previous LONDON)
By Kate Duguid
NEW YORK, June 17 (Reuters) - The U.S. dollar rose from
early lows on Wednesday as investors wary of wider geopolitical
risks sought its relative safe haven ahead of midday remarks by
Federal Reserve Chair Jerome Powell.
Sentiment was driven by record-high coronavirus infections
in six U.S. states, new cases of the disease in Beijing, and
clashes between Indian and Chinese troops in the western
Himalayas. Fed Chair Powell will speak at noon EDT (1600 GMT) in his
second day of remarks to U.S. lawmakers. On Tuesday, Powell
tamped down some recent market optimism with a bleak U.S.
economic picture, while reinforcing hopes for continued policy
support. The dollar edged 0.27% higher to 97.25 against a basket of
currencies =USD , lifting it nearly 0.5% from the day's lows.
"Underlying dollar sentiment remains hazy, though as the Fed
chairman, who speaks again today on Capitol Hill, warns that
risks remain to the economic outlook and that the economy isn't
out of the woods," wrote Joe Manimbo, senior market analyst at
Western Union Business Solutions.
The dollar index has recovered from a three-month low last
week, but the outlook for the safe-haven currency looks weak as
U.S. economic data has begun to recover and stock indexes have
soared.
"The broad dollar outlook remains negative as investors are
cutting back on some of the extreme tail risk hedging bets in
the markets, some of which were buying dollars," said Ilan
Solot, a currency markets strategist at Brown Brothers Harriman.
Powell on Tuesday said that a full U.S. economic recovery
will not occur until Americans are sure the coronavirus pandemic
has been brought under control. That remains far from certain,
with new infections hitting record highs on Tuesday in six U.S.
states, including Texas and Florida. China has also sharply ramped up restrictions on people
leaving Beijing in an effort to stop the worst coronavirus
flare-up since February from spreading.
The Fed's cautious message also checked momentum in the euro
EUR= , which held well below a three-month high of $1.142 hit
last week. It was trading at $1.122 on Wednesday, down 0.35%
after rallying nearly 5% since a Franco-German proposal for a
recovery fund in late May.