* Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
* Dollar slips from 23-month highs
* US GDP data awaited
* Global stocks flat, European markets open mixed
* Gold firms 0.4 percent
By Ritvik Carvalho
LONDON, April 26 (Reuters) - The dollar retreated from 23-month highs on Friday ahead of keenly awaited U.S. gross domestic product data for the first quarter, while global shares were on track for a fifth weekly gain in a row despite subdued trade.
The dollar index, which measures the greenback against a basket of peers, was down 0.1 percent on the day, off a nearly two-year high hit on the previous day.
The U.S. currency has gained strongly over the past few days as investors expect the U.S. economy to outperform the rest of the developed world. The dollar index is set to end the week 0.7 percent higher.
The other big mover in currencies was the Japanese yen, which gained as speculators cut short positions ahead of holidays which will see most Japanese markets shut for six whole trading days.
“We think the dollar is likely to depreciate when the global economy improves and also when global investors become more risk-averse,” said UBS strategists in a research note, in a break with what they said was the dollar’s traditional outperformance when the U.S. economy outperforms its peers or when global risk aversion drives investors to the safety of U.S. assets.
Reasons they cited were the Fed having more room to cut rates than its global peers and an acceleration in global growth that might allow those peers to tighten policy, thereby closing the interest rate gap.
“Only a benign environment where global central banks tread water and yield differentials remain static (i.e. the status quo) would be U.S. dollar-supportive.”
Global stocks were largely flat on the day after subdued trading in Asia. MSCI’s All-Country World Index, which tracks shares in 47 countries, was down less than 0.1 percent.
Most European bourses opened lower, with Germany’s DAX and France’s CAC 40 being the only gainers. The pan-European STOXX 600 index was down 0.1 percent.
All eyes were on the U.S. GDP release which will be closely watched after a string of largely resilient data from an economy in its 10th year of expansion.
A string of solid numbers has led analysts to revise up their forecasts for growth and the latest median polled by Reuters is for an annualised 2.0 percent.
The closely-watched estimate of GDP from the Atlanta Federal Reserve is projecting an outcome of 2.7 percent, a huge turnaround from a few weeks ago when it was at 0.5 percent.
“A steady GDP reading will reinforce (stock) bulls’ appetite as worries over a recession will diminish but a potential miss may trigger some nervous profit-taking ahead of the weekend,” said Konstantinos Anthis, head of research at ADSS.
The GDP release also sets the stage for a Federal Reserve interest rate decision next week, where investors will try to anticipate how the U.S. central bank will react to mostly resilient indicators of late.
Yet the rebound has not been mirrored in inflation, which remains subdued across much of the developed world, prompting a host of central banks to turn dovish.
Just this week central banks in Sweden and Canada have backed off plans to tighten, while the Bank of Japan tried to dispel doubts about its accommodative stance by pledging to keep rates at super-low levels for at least one more year.
European Central Bank Vice-President Luis de Guindos on Thursday opened the door to more money-printing if needed to boost inflation in the euro zone.
Rate cuts look much likelier in Australia and New Zealand after recent disappointingly weak inflation reports.
The Federal Reserve holds a policy meeting next week and is expected to reaffirm its patient stance. A Reuters poll of analysts published on Thursday found most believed the Fed was done with tightening altogether.
Major central banks are done tightening policy, according to a majority of economists polled by Reuters, with the growth outlook wilting across developed and emerging economies along with scant prospects for a surge in inflation.
Elsewhere in currencies, the euro was off 1 percent for the week at $1.1136 as euro zone economic figures continued to disappoint, though it was 0.1 percent higher on the day.
Against a basket of currencies, the dollar was 0.8 percent firmer for the week so far at 98.145 having touched its highest since May 2017.
In commodity markets, spot gold was 0.4 percent firmer at $1,281.81 per ounce.
Oil prices dipped on Friday on expectations that producer club OPEC will soon raise output to make up for a decline in exports from Iran following a hardening of sanctions on Tehran by the United States. (Reporting by Ritvik Carvalho; additional reporting by Wayne Cole and Swati Pandey in SYDNEY Editing by Gareth Jones)