FOREX-Dollar dips before Fed, Chinese data boosts economic sentiment

    * Graphic: World FX rates in 2020

 (Adds quotes, updates prices; previous LONDON)
    By Karen Brettell
    NEW YORK, Sept 16 (Reuters) - The U.S. dollar fell on
Wednesday ahead of the Federal Reserve's economic projections,
and as optimism that the global economy is recovering reduced
demand for the currency.
    The Fed's projections will be watched for any new
indications on when the U.S. central bank may lift rates from
zero bound. Any details on its new inflation targeting policy
and a possible shift towards buying more longer-dated Treasuries
as part of its quantitative easing program are also in focus.
    The Fed, however, may be running out of new ways to ease
monetary conditions after Fed Chairman Jerome Powell last month
announced a new inflation policy, which would allow price
pressures to run higher than previously before raising rates.

    "I think the bar for a dovish surprise is quite high at this
point, partly because the toolkit is somewhat limited," said
Vassili Serebriakov, an FX strategist at UBS in New York.
    The dollar index against a basket of currencies fell
0.21% to 92.92. 
    Stronger Chinese data for August and optimism about a
vaccine for the coronavirus helped boost risk sentiment this
week, and reduced demand for the greenback.
    "I would say the biggest impulse this week was the stronger
activity data for the month of August from China, and maybe a
bit of ongoing optimism about the vaccine," Serebriakov said.
    Data on Tuesday showed that China's industrial output
accelerated the most in eight months in August, while retail
sales grew for the first time this year.
    "People are starting to embrace a new theme, which is that
China is managing much, much better than anyone else," said
Davis Hall, head of capital markets in Asia at Indosuez Wealth
    The offshore yuan gained to 6.7536, the strongest
since May 2019.
    U.S. data on Wednesday showed consumer spending slowed in
August, with a key retail sales gauge unexpectedly declining.

    The Japanese yen strengthened as far as 104.70
against the greenback, the strongest since July 31.
    Japan's new Prime Minister Yoshihide Suga pledged on
Wednesday that he will do his best to protect employment while
also countering the coronavirus.
    The euro rose 0.05% to $1.1851.
    Sterling reversed earlier losses and rose 0.62% to
$1.2966 in what would be its biggest daily rise in 2-1/2 weeks
before a meeting of the Bank of England on Thursday, when
policymakers may strike a downbeat assessment for the struggling
    Currency bid prices at 9:48AM (1348 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1851        $1.1845     +0.05%         +5.72%      +1.1882     +1.1830
 Dollar/Yen       JPY=        104.8400       105.4300    -0.56%         -3.69%      +105.4400   +104.8200
 Euro/Yen         EURJPY=     124.27         124.91      -0.51%         +1.89%      +125.0100   +124.2500
 Dollar/Swiss     CHF=        0.9070         0.9080      -0.11%         -6.28%      +0.9094     +0.9056
 Sterling/Dollar  GBP=        1.2966         1.2886      +0.62%         -2.22%      +1.2994     +1.2876
 Dollar/Canadian  CAD=        1.3177         1.3181      -0.03%         +1.47%      +1.3200     +1.3155
 Australian/Doll  AUD=        0.7325         0.7301      +0.33%         +4.33%      +0.7343     +0.7289
 Euro/Swiss       EURCHF=     1.0751         1.0756      -0.05%         -0.93%      +1.0766     +1.0749
 Euro/Sterling    EURGBP=     0.9139         0.9190      -0.55%         +8.10%      +0.9208     +0.9130
 NZ               NZD=        0.6738         0.6721      +0.25%         +0.03%      +0.6753     +0.6703
 Dollar/Norway    NOK=        9.0054         9.0285      -0.26%         +2.59%      +9.0560     +8.9714
 Euro/Norway      EURNOK=     10.6750        10.6990     -0.22%         +8.52%      +10.7187    +10.6520
 Dollar/Sweden    SEK=        8.7851         8.7894      +0.00%         -6.00%      +8.8138     +8.7648
 Euro/Sweden      EURSEK=     10.4146        10.4150     +0.00%         -0.52%      +10.4320    +10.4035

 (Additional reporting by Julien Ponthus in London; Editing by
Sandra Maler)