FOREX-Dollar set for biggest weekly drop in 10 months

Studying market data including diagrams

* Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee

LONDON, Dec 21 (Reuters) - The dollar consolidated overnightlosses on Friday and is set for its biggest weekly drop in 10months as the threat of a U.S. government shutdown and lowerbond yields on the back of concerns of slowing economic growthweigh.

Against a basket of its rivals .DXY , the dollar wasbroadly steady at 96.247 but is set to fall 1.2 percent for theweek, its biggest weekly drop since mid-February.

The dollar received little support from the bond markets,with yields on 10-year U.S. Treasury debt US10YT=RR settlingat 2.80 percent, well below a more than seven-year high of above3.2 percent hit in November.

Some liquidation of long dollar positions, one of the mostcrowded trades in global markets, was also evident a day afterthe Federal Reserve raised policy rates and delivered an outlookthat was less dovish than traders had anticipated.

The safe-haven Japanese yen JPY=EBS benefited from thenervous sentiment, strengthening 0.2 percent against the dollarto 111.09 yen.

Adding to pressure on the dollar was news that U.S.President Donald Trump has refused to sign legislation to fundthe U.S. government unless he got money for a border wall,risking a partial federal shutdown on Saturday.

The euro EUR=EBS was 0.22 percent higher at $1.1470, justbelow a 1-1/2-month peak of $1.1486 the previous day. It washeaded for a 1.4 percent gain on the week.

The pound GBP=D3 gained 0.3 percent to $1.2690. (Reporting by Saikat Chatterjee; Additional reporting byShinichi Saoshiro in TOKYO; Editing by Kevin Liffey) ((saikat.chatterjee@thomsonreuters.com; +44-20-7542-1713;Reuters Messaging: saikat.chatterjee.reuters.com@reuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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