June 25, 2019 / 3:07 PM / 5 months ago

FOREX-Bets on U.S. rate cuts keep dollar on defense

    * Traders await more clues on rate cuts from Fed officials 
    * Euro hovers around $1.14, hits new 3-month high
    * Yen rises above 107 vs dollar, highest since January
    * Further dollar softness seen hinging on G20 summit outcome
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, June 25 (Reuters) - The dollar slipped against
most major currencies on Tuesday, hitting a three-month low
versus the euro, as expectations of multiple decreases of U.S.
interest rates by the Federal Reserve have spurred selling of
the U.S. currency.
    Growing tensions between Iran and the United States stoked
fresh safe-haven buying of yen, which reached its strongest
levels against the greenback since early January. 
    Traders await fresh clues on the Fed's stance on possible
rate cuts, starting as soon as next month. A number of Fed
officials were scheduled to speak on Tuesday with Fed Chairman
Jerome Powell due at 1 p.m. (1700 GMT).
    Last week's signal from the U.S. central bank that it was
ready to lower borrowing costs to counter slowing domestic
growth and sluggish inflation caused traders to exit their
earlier bullish positions on the dollar, analysts said.

    Interest rates futures implied traders fully priced in a
quarter-point rate cut from the Fed next month and saw high
rising probability of at least two more cuts after July.
    Falling U.S. bond yields and bearish technical indicators
have stoked the view the greenback would have more room to fall
in the coming months, analysts said.
    "This has more legs to go," said Paresh Upadhyaya, director
of currency strategy at Amundi Pioneer Investments in Boston.
    At 10:55 a.m. (1455 GMT), the dollar was down
0.34% at 106.94 yen after hitting 106.78 yen during Asian
trading, which was its weakest since Jan. 3.
    Demand for the yen was underpinned by new U.S. sanctions
against Iran's supreme leader and foreign minister. Iran said on
Tuesday the move had closed off diplomacy between the two
    The greenback was 0.13% lower versus the pound. It
was modestly weaker against the Canadian, Australian and New
Zealand dollars.
    On the other hand, the euro was down 0.12% at $1.1384. The
single currency retreated from $1.1412 earlier Tuesday, which
was its highest since March 21.
    The dollar index moved further away from its 200-day moving
average at 95.995.
    Investors are monitoring whether U.S. President Donald Trump
and Chinese President Xi Jinping will at least call a truce in
their trade war when they meet at a summit of the G20 major
economies in Osaka, Japan, later this week.
    "The next risk event is the G20 summit. It will give us a
sense just how far things are between U.S. and China on trade,"
Upadhyaya said.
    Trump considers his meeting with Xi an opportunity to
"maintain his engagement" and see where China is on their trade
dispute, a senior U.S. official said on Monday.
    Currency bid prices at 10:53AM (1453 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1392        $1.1396     -0.04%         -0.67%      +1.1412     +1.1377
 Dollar/Yen       JPY=        106.9100       107.2800    -0.34%         -3.04%      +107.4000   +106.7900
 Euro/Yen         EURJPY=     121.79         122.28      -0.40%         -3.51%      +122.4600   +121.6600
 Dollar/Swiss     CHF=        0.9719         0.9718      +0.01%         -0.97%      +0.9774     +0.9695
 Sterling/Dollar  GBP=        1.2728         1.2739      -0.09%         -0.23%      +1.2783     +1.2711
 Dollar/Canadian  CAD=        1.3168         1.3177      -0.07%         -3.41%      +1.3196     +1.3152
 Australian/Doll  AUD=        0.6971         0.6961      +0.14%         -1.11%      +0.6974     +0.6954
 Euro/Swiss       EURCHF=     1.1075         1.1076      -0.01%         -1.59%      +1.1124     +1.1062
 Euro/Sterling    EURGBP=     0.8947         0.8944      +0.03%         -0.41%      +0.8963     +0.8917
 NZ               NZD=        0.6651         0.6617      +0.51%         -0.98%      +0.6653     +0.6618
 Dollar/Norway    NOK=        8.5126         8.4789      +0.40%         -1.46%      +8.5205     +8.4769
 Euro/Norway      EURNOK=     9.6974         9.6678      +0.31%         -2.11%      +9.7023     +9.6644
 Dollar/Sweden    SEK=        9.2563         9.2778      -0.29%         +3.26%      +9.2932     +9.2421
 Euro/Sweden      EURSEK=     10.5449        10.5760     -0.29%         +2.74%      +10.5906    +10.5180

 (Additional reporting by Tommy Wilkes in LONDON
Editing by Gareth Jones and Jonathan Oatis)
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