* Dollar gains but moves are contained
* Euro weakens as fourth-quarter GDP data comes in
* Yuan steadies, EM currencies drop
* Graphic: World FX rates https://tmsnrt.rs/2RBWI5E
By Tommy Wilkes
LONDON, Jan 29 (Reuters) - The dollar gained and risk-sensitive currencies fell on Friday after an assault on hedge-fund equity short positions in the United States rattled investor confidence and boosted demand for safe-haven currencies.
The moves in foreign exchange markets were measured, with the dollar still within recent trading ranges, but the buying of dollars underscored that concerns about the wild swings in stock prices was felt across markets.
The dollar has benefited from safety buying since the start of the week, when investors fretted that President Joe Biden's fiscal spending package would not be as large as the proposed $1.9 trillion.
COVID-19 vaccine rollouts globally have been running into trouble, too, adding to investor jitters. Production delays have snowballed into a spat between the European Union and drugmakers over how best to direct the limited supplies available.
"We could see the greenback retain some momentum into the weekend on the back of safe-haven demand: further developments in the Robinhood story will be closely watched in this sense," ING said, referring to the brokerage popular with the retail customers taking on hedge funds.
In early London trading, the dollar index -- which measures the dollar against a basket of currencies -- rose 0.2% to 90.739 =USD . It is up half a percent for the week.
The euro dipped 0.1% to $1.2107 EUR=EBS before German fourth-quarter GDP data due at 0900 GMT.
The dollar gained 0.4% versus the Japanese yen to 104.64 JPY=EBS .
The Swiss franc, another currency that investors often buy when nervous, was little moved versus the euro at 1.0771 EURCHF=EBS .
Risk-sensitive currencies like the Australian dollar AUD=D3 fell. So did most emerging-market currencies also dropped.
The Chinese yuan strengthened to 6.4695 yuan per dollar in offshore markets CNH=EBS .
Te People's Bank of China (PBOC) injected 100 billion yuan into the financial system on Friday, following a week of reducing liquidity, which had sparked concerns the central bank was in fact tightening monetary policy. L1N2K404V
Despite the dollar's move higher this week, most analysts are sticking to their calls it will weaken in 2021 as the new U.S. government implements massive fiscal spending while the Federal Reserve maintains its ultra-easy monetary policy.
"The overall trend does reflect these supply issues around the U.S. dollar," said Michael McCarthy, chief strategist at CMC Markets in Sydney.
"Wide expectations of that huge issuance that's coming and the support of the Fed mean that we're looking in the medium-term for further U.S. dollar weakness."
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