* Euro bounces as political concerns settle
* Net short USD bets halve in a month
* Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
LONDON, Oct 30 (Reuters) - The dollar slipped on Monday after its biggest weekly rise this year as investors took profits before a central bank decision this week where markets are waiting to see if strong economic data will spur a more hawkish stance.
Net short bets on the dollar fell to their smallest in nearly three months, about $8 billion, roughly half of what they were a month ago, according to calculations by Reuters and Commodity Futures Trading Commission data released last week.
Investor sentiment towards the dollar has undergone a significant shift in recent weeks thanks to strong data and expectations about the appointment of a new hawkish-leaning Federal Reserve chair.
"We think the dollar positioning has become a lot more balanced in the market and we would need some surprising inflation prints to push the dollar higher from these levels," said Manuel Oliveri, currency strategist at Credit Agricole.
The dollar index, which tracks the currency against a basket of six major rivals, dipped 0.2 percent to 94.70 but remained not far from Friday's three-month high of 95.150.
Fridays release of third quarter GDP data showed the economy expanded by 3.0 percent, beating forecasts, and the first time since 2014 that the U.S. economy has experienced growth of 3 percent or more for two quarters in a row.
Meanwhile, the euro climbed 0.20 percent to $1.1632 following a drop in Spain's borrowing costs as nerves settled after a weekend poll showed Catalan secessionists may lose their majority in elections scheduled for December.
The euro, one of the best performing currencies this year, has been hit in recent weeks as a dovish European Central Bank combined with unrest in Catalonia has prompted some investors to take profits.
Elsewhere, the dollar was broadly flat against the yen to 113.58, after a three-month high of 114.45 yen on Friday.
At its two-day meeting ending on Tuesday, the Bank of Japan is set to keep intact a pledge to guide short-term interest rates at minus 0.1 percent and the 10-year Japanese government bond yield around zero percent.
Prime Minister Shinzo Abe's victory in a lower house election this month heightened expectations the BOJ's ultra-loose policy - a key pillar of his "Abenomics" stimulus policies - will continue, as inflation remains well short of the central bank's target. Japan's core consumer prices rose 0.7 percent year-on-year in September.
For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.bi z / c m s / ? p a g e I d = l i v e m a r k e t s (Reporting by Saikat Chatterjee; Editing by Robin Pomeroy)