FOREX-Yen gains as weak U.S. data, economic uncertainty dim outlook

    * Yen climbs to 7-week high vs dollar, 1-1/2-month peak vs euro
    * Dollar index rises to one-week high
    * Sterling drops as UK negative rates talk escalate
    * Graphic: World FX rates in 2020

 (Recasts, adds new comment, U.S. data, FX table, updates prices, changes byline, dateline; previous
    By Gertrude Chavez-Dreyfuss and Sinéad Carew
    NEW YORK, Sept 17 (Reuters) - The safe-haven yen rose to a seven-week high against the dollar and a
1-1/2-month peak versus the euro, amid another batch of generally weak U.S. data and overall uncertainty
about the economic outlook, backing the Federal Reserve's concern on Wednesday about the pace of recovery.
    The dollar index rose to a one-week high, but was last little changed on the day, as risk appetite
diminished. Shares on Wall Street were lower and U.S. Treasuries were fairly well-supported.
    At Wednesday's policy meeting, the Fed pledged to keep rates near zero until the labor market reaches
"maximum employment" and inflation is on track to "moderately exceed" the 2% target, with most
policymakers seeing rates on hold through at least 2023.
    "What we've seen in the aftermath of the Fed meeting is a bit of a risk-off tone and one of the things
that's come back into play since early September is a realignment of FX and equity correlations so the
consolidation of the dollar remains intact and there's some negative bias in the risk space," said Mazen
Issa, senior FX strategist, at TD Securities. 
    "It's helping to put a little more downside pressure on some of the majors."
    Wednesday's set of U.S. data also added to the gloom in risk sentiment.
    U.S. jobless claims remained elevated at 860,000, while both housing starts and the Philadelphia Fed
business index fell.
    "Taken together, this morning's data releases suggest that – despite positive momentum – there is a
long way to go until pre-pandemic levels of activity are achieved," said Matthew Eidinger, market
strategist, at Cambridge Global Payments. 
    He added that against a soft economic backdrop, the Fed's commitment to hold rates near zero for some
time appears well-justified.
    "It is clear that the economy needs all the help it can get, from monetary and fiscal policymakers
alike," Eidinger said.
    In late morning trading, the dollar fell 0.3% against the yen to 104.62 yen, after sliding
to a seven-week low of 104.52.
    The euro dropped 0.3% to 123.60 yen. Earlier it touched a low of 123.33 yen, its weakest
level since late July.
    The dollar index, a measure of its value against six major rivals, was last little changed at 93.12
, but hit a one-week high earlier in the session. 
    The euro briefly hit a one-month low earlier at $1.1737 before trimming some losses to stand
0.1% lower on the day at $1.1809. 
    The Australian, New Zealand and Canadian dollars, tied to commodity prices
as well as the ebbs and flows of risk appetite were all weaker on the day.
    That said, with the new guidance from the Fed focused on keeping U.S. interest rates at current record
lows until employment and inflation reach its targets, some strategists argue any dollar strength is
likely to be temporary.
    The pound fell 0.4% to $1.2916 after the Bank of England said it had been briefed on how a
negative interest rate could be implemented effectively, should it be needed..
    Currency bid prices at 10:42AM (1442 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1811        $1.1814     -0.03%         +5.37%      +1.1819     +1.1738
 Dollar/Yen       JPY=        104.6500       104.9400    -0.28%         -3.87%      +105.1600   +104.5300
 Euro/Yen         EURJPY=     123.63         123.99      -0.29%         +1.38%      +124.0800   +123.3300
 Dollar/Swiss     CHF=        0.9098         0.9092      +0.07%         -5.99%      +0.9138     +0.9089
 Sterling/Dollar  GBP=        1.2939         1.2965      -0.20%         -2.41%      +1.2998     +1.2866
 Dollar/Canadian  CAD=        1.3207         1.3176      +0.24%         +1.70%      +1.3247     +1.3169
 Australian/Doll  AUD=        0.7291         0.7305      -0.19%         +3.85%      +0.7311     +0.7255
 Euro/Swiss       EURCHF=     1.0748         1.0744      +0.04%         -0.96%      +1.0757     +1.0729
 Euro/Sterling    EURGBP=     0.9128         0.9110      +0.20%         +7.97%      +0.9170     +0.9084
 NZ               NZD=        0.6730         0.6731      -0.01%         -0.09%      +0.6738     +0.6676
 Dollar/Norway    NOK=        9.0731         9.0193      +0.60%         +3.36%      +9.1345     +9.0190
 Euro/Norway      EURNOK=     10.7229        10.6590     +0.60%         +9.00%      +10.7535    +10.6570
 Dollar/Sweden    SEK=        8.8051         8.7944      +0.06%         -5.81%      +8.8664     +8.7972
 Euro/Sweden      EURSEK=     10.4015        10.3953     +0.06%         -0.65%      +10.4298    +10.3942
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; Editing by
Andrea Ricci)

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