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FOREX-Dollar on defensive after more weak U.S. economic data
* Weak U.S. business investment data weighs on greenback
* IMM data reveals further reduction in long dollar positions
* Euro pressured as Greece, creditors negotiate debt deal
By Lisa Twaronite
TOKYO, April 27 (Reuters) - The dollar started the week on the defensive on Monday after more disappointing U.S. economic data reinforced expectations the U.S. Federal Reserve will not hike interest rates any time soon, while concerns about Greece's ongoing debt talks pressured the euro.
Data on Friday showed U.S. business investment spending plans fell for a seventh straight month in March, suggesting the economy was struggling to rebound.
The data cemented the view that the U.S. central bank will not send any imminent tightening signal after its two-day Federal Open Market Committee meeting scheduled to begin on Tuesday.
The data sent the dollar index, which tracks the greenback against a basket of six major rivals, to a nearly three-week low of 96.755. It stood at 96.911 in early Asian trading.
"The U.S. dollar finished the week on seemingly fragile footing. The question investors are asking is if the steady drum beat of disappointing U.S. economic data turns the dollar's bull case on its head," Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York, wrote in a note to clients.
"The Europe and Japanese side of the divergence have not changed, but the U.S. side has," Chandler said.
While the European Central Bank and the Bank of Japan are still seen as maintaining ultra-easy monetary policy, market expectations for the U.S. Federal Reserve's contrasting interest rate increase have been pushed further down the road. Few investors now expect a rate hike in June, with most predicting a move later this year.
The Fed has kept overnight interest rates near zero since December 2008, and a recent spate of uninspiring data on retail sales, employment and housing starts suggests it will keep them there for at least several more months.
Data from the Commodity Futures Trading Commission and Thomson Reuters released on Friday showed that speculators reduced positive bets on the U.S. dollar in the week ended April 21, pushing the currency's net long position to its lowest since September.
The dollar was buying 118.91 yen, down about 0.1 percent on the day and well below last week's high of 120.10 yen touched on Thursday.
The euro was slightly down at $1.0868, below Friday's more than two-week high of $1.0900 hit on hopes of progress in Greece's negotiations with European Union and International Monetary Fund creditors.
On Friday, euro zone finance ministers meeting in the Latvian capital of Riga warned Athens that it would get no fresh aid until it agreed to a complete economic reform plan.
As the country risks running out of cash within weeks, Greece's governors and other local officials agreed on Saturday (Shenzhen: 002291.SZ - news) to lend cash to the near-bankrupt central government after Prime Minister Alexis Tsipras assured them the measure would last for only a short period of time.
Tsipras and German Chancellor Angela Merkel agreed in a phone conversation on Sunday to maintain contact during the ongoing debt talks, a Greek government official said. (Editing by Eric Meijer)
