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Speculators pare back long U.S. dollar bets for 2nd straight week-CFTC, Reuters

(Adds details on dollar and Mexican peso contracts, analyst

comments, table, byline)

By Gertrude Chavez-Dreyfuss

NEW YORK, Jan 20 (Reuters) - Speculators reduced long bets

on the U.S. dollar for a second straight week, as investors

continued to pare back overextended positions on the greenback

and worried about U.S. President Donald Trump's trade and

currency policies.

The value of the dollar's net long position was $24.44

billion in the week ended Jan. 17, from $24.95 billion the

previous week, according to data from the Commodity Futures

Trading Commission released on Friday and calculations by

Reuters.

After a sharp rally following Trump's victory in November

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that saw a 3 percent surge for the month, the dollar has come

back down to earth, undermined by uncertainty surrounding the

new president's policies, specifically a stimulus plan that was

promised during his campaign.

The dollar had rallied the last two months on the back of

Trump's campaign promises of fiscal stimulus and tax cuts, but

that rally ran out of steam in the run-up to Trump's

inauguration.

For the month of January, the dollar index has fallen 1.3

percent so far, on track for its weakest monthly performance

since March last year.

"If the dollar continues to weaken, we're rapidly running

out of room and dollar bulls may be forced into a full-fledged

capitulation, which has yet to take place at current levels,"

said John Hardy, head of forex strategy at Saxo Bank, in

Copenhagen.

"If the dollar firms, on the other hand, the gains could

come quickly as frustrated bulls have been without a case,

ironically since the Fed's rate hike in December, which marked

the end of the most recent dollar advance," he added.

Net (LSE: 0LN0.L - news) short contracts on the Mexican peso, meanwhile, rose in

the latest week to 73,321, the largest since early October.

The peso has been the most vulnerable to comments from

Trump. His persistent attacks on Mexico over immigration and

jobs taken from Americans have damaged the peso, which fell to a

record low against the dollar this week.

"The outlook for the peso remains bearish amid elevated

economic uncertainty," said Joe Manimbo of Western Union

Business Solutions in Washington.

"The peso's deteriorating value keeps pressure on Mexico's

central bank to conduct dollar-weakening, peso-supportive forex

intervention."

The Reuters calculation for the aggregate U.S. dollar

position is derived from net positions of International Monetary

Market speculators in the yen, euro, British pound, Swiss franc

and Canadian and Australian dollars.

Japanese Yen (Contracts of 12,500,000 yen)

$8.639 billion

17 Jan 2017 Prior week

week

Long 28,560 26,041

Short 106,390 105,880

Net -77,830 -79,839

EURO (Contracts of 125,000 euros)

$8.904 billion

17 Jan 2017 Prior week

week

Long 128,846 134,747

Short 195,346 200,570

Net -66,500 -65,823

POUND STERLING (Contracts of 62,500 pounds sterling)

$5.139 billion

17 Jan 2017 Prior week

week

Long 55,242 56,742

Short 121,484 122,573

Net -66,242 -65,831

SWISS FRANC (Contracts of 125,000 Swiss francs)

$1.709 billion

17 Jan 2017 Prior week

week

Long 7,166 10,012

Short 20,849 24,258

Net -13,683 -14,246

CANADIAN DOLLAR (Contracts of 100,000 Canadian dollars)

$0.418 billion

17 Jan 2017 Prior week

week

Long 32,064 28,405

Short 37,520 36,340

Net -5,456 -7,935

AUSTRALIAN DOLLAR (Contracts of 100,000 Aussie dollars)

$-0.367 billion

17 Jan 2017 Prior week

week

Long 42,401 40,782

Short 37,556 44,630

Net 4,845 -3,848

MEXICAN PESO (Contracts of 500,000 pesos)

$1.705 billion

17 Jan 2017 Prior week

week

Long 22,573 23,878

Short 95,894 95,654

Net -73,321 -71,776

NEW ZEALAND DOLLAR (Contracts of 100,000 New Zealand dollars)

$0.886 billion

17 Jan 2017 Prior week

week

Long 25,517 22,989

Short 37,805 36,949

Net -12,288 -13,960

(Reporting by Gertrude Chavez-Dreyfuss, editing by G Crosse and

Tom Brown)