FOREX-Dollar slips after political wrangling slows rally

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

By Iain Withers
LONDON, Aug 4 (Reuters) - A dollar rebound faltered on
Tuesday as political wrangling over a U.S. relief plan and the
gloomy outlook weighed on the currency.
After its worst month in a decade in July, the greenback
started August on a firm note as some investors trimmed their
short positions.
That only carried it so far, and the dollar edged down 0.2%
on Tuesday against a basket of currencies. =USD
The euro - which gained 5% at the dollar's expense in July
- inched up on the day, last up 0.2% at $1.17875. EUR=EBS
"I think the eurozone recovery will be a lot faster than the
U.S. recovery and that growth differential will continue to
drive EUR/USD higher," Marshall Gittler, FX analyst at BDSwiss,
said in a note.
The Aussie dollar AUD=D3 edged ahead nearly 0.3% after the
central bank delivered no surprises by holding policy steady.
Australia's central bank predicted the economic recovery
will be uneven as the country's second biggest state Victoria
locks down to fight a resurgence of the virus. Despite a slowdown in new U.S. virus cases and encouraging
factory data, investors are reserving judgment on whether a U.S.
economy with 30 million people out of work can really lead the
world's recovery.
Talks on a potential further economic relief package are
ongoing, though top Democrats in the U.S. Congress and White
House negotiators on Monday said they had made progress.
"We're still in a situation where the market wants to
believe the recovery is on track but is still worried about the
COVID situation," said Bank of Singapore FX analyst Moh Siong
Sim.
"The fiscal wrangling in the U.S. is the next key test for
risk sentiment, and if they manage to get a deal - which seems
likely - that could be supportive of risk sentiment."