July 22, 2019 / 2:26 PM / a month ago

FOREX-Dollar, euro hold steady ahead of ECB meeting

    * Traders see just below 50% chance of ECB cutting rates
    * Falling U.S. yields pare dollar's gain vs euro
    * Swiss franc hits two-year high vs euro on safe-haven
demand
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, July 22 (Reuters) - The dollar and euro were
little changed on Monday as traders wait for decisions from the
U.S. Federal Reserve and the European Central Bank on how much
and how fast they may reduce interest rates, beginning with the
ECB on Thursday. 
    Traders see about a 46% probability European policy-makers
will lower a key deposit rate by 10 basis points to -0.50 basis
points to combat risk from global trade tensions and anemic
regional inflation, based on local interest rates market.

    "Our base case for the ECB could see some small upside in
(euro versus dollar) unless the Governing Council delivers a
strongly dovish surprise," said Ned Rumpeltin, TD Securities'
European head of FX strategy. "Overall, however, we think recent
range should remain in place."
    Rising chances of European interest rates sliding deeper
into negative territory had pressured the euro lower against the
dollar, and propelled the Swiss franc to a two-year peak against
the single currency.
    Meanwhile, the greenback has been bogged down by bets the
Federal Reserve will likely cut U.S. interest rates for the
first time in a decade to deal with the same issues as the ECB. 
    Data published late on Friday showed speculators dialed back
their net bullish positions in the dollar against other G10
currencies to their lowest level in a year.
    At 10:10 a.m. (1410 GMT), the euro was marginally
lower at $1.1215, rebounding from a session low of $1.1207.
    The dollar moved lower in step with U.S. yields. The
two-year Treasury yield slipped to 1.801% early on
Monday, which was below the Fed's current target range of
2.25%-2.50% on short-term rates.
    An index that tracks the greenback against a basket of
currencies was fractionally higher at 97.201.
    U.S. rates futures implied traders positioned for a 72%
chance the U.S. central bank may lower its rate range by a
quarter point at its July 30-31 policy meeting, down from 76%
late on Friday, according to CME Group's FedWatch tool.
    Rates futures signaled traders priced in nearly a 28% chance
for a 50 basis-point cut next week, up from 24% on Friday.
    Rates futures rallied last Thursday with perceived chances
for a half-point rate cut soaring to 71% after a dovish speech
by New York Fed President John Williams. Those bets abated after
a Fed spokesman clarified that the remarks did not refer to
"potential policy actions."
    The Swiss franc fell to 1.0999 franc per euro
earlier on Monday, which was its strongest level against the
common currency since July 2017.
========================================================
    Currency bid prices at 10:14AM (1414 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1213        $1.1220     -0.06%         -2.23%      +1.1225     +1.1207
 Dollar/Yen       JPY=        107.9400       107.7000    +0.22%         -2.10%      +108.0600   +107.7100
 Euro/Yen         EURJPY=     121.08         120.86      +0.18%         -4.07%      +121.1600   +120.8100
 Dollar/Swiss     CHF=        0.9814         0.9816      -0.02%         +0.00%      +0.9840     +0.9804
 Sterling/Dollar  GBP=        1.2471         1.2500      -0.23%         -2.24%      +1.2520     +1.2456
 Dollar/Canadian  CAD=        1.3104         1.3060      +0.34%         -3.91%      +1.3105     +1.3041
 Australian/Doll  AUD=        0.7038         0.7042      -0.06%         -0.16%      +0.7057     +0.7032
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1007         1.1014      -0.06%         -2.19%      +1.1035     +1.1000
 Euro/Sterling    EURGBP=     0.8991         0.8971      +0.22%         +0.08%      +0.9000     +0.8963
 NZ               NZD=        0.6769         0.6761      +0.12%         +0.77%      +0.6786     +0.6758
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.6039         8.5717      +0.38%         -0.40%      +8.6073     +8.5686
 Euro/Norway      EURNOK=     9.6488         9.6180      +0.32%         -2.60%      +9.6527     +9.6129
 Dollar/Sweden    SEK=        9.4119         9.3774      +0.25%         +5.00%      +9.4141     +9.3825
 Euro/Sweden      EURSEK=     10.5545        10.5279     +0.25%         +2.83%      +10.5579    +10.5206
 
    
    

    
 (Additional reporting by Tommy Wilkes in LONDON
Editing by Susan Thomas)
  
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