July 17, 2019 / 2:37 PM / 2 months ago

FOREX-Dollar holds steady, pound hits 27-month low

    * Dollar overvalued; euro, yen, yuan in line - IMF
    * Fed's Beige Book on tap as traders expect U.S. rate cut
    * Sterling slips to new 27-month low vs dollar
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Updates market action, changes dateline, previous LONDON)
    By Richard Leong
    NEW YORK, July 17 (Reuters) - The dollar was little changed
against most major currencies on Wednesday, pausing after prior
day's gains tied to stronger-than-forecast retail sales data,
while the pound fell to 27-month lows versus the greenback on
jitters about a no-deal Brexit.
    The euro hit a one-week low against the dollar and towards
the lower end of this year's trading range, weighed down by
expectations of easing from the European Central Bank and
investors' preference for the higher-yielding U.S. currency.
    "It's been a quiet midweek night of trade in FX with major
holding steady around key levels after selling off against the
dollar yesterday," Boris Schlossberg, managing director of FX
strategy at BK Asset Management wrote in a research note.
    The euro fell to $1.1200 earlier Wednesday before
clawing back up 0.06% to $1.1219.
    The dollar was little changed at 108.19 yen.
    The pound fell to a fresh 27-month low of $1.2382
before rebounding to $1.2429. It also hit a fresh six-month low
against the euro at 90.51 pence.
    An index that tracks the dollar against the euro, yen, pound
and three other currencies was down 0.08% at 97.315 after
touching a one-week high.
    The greenback has strengthened since late June in response
to better-than-expected data on U.S. jobs, inflation and retail
sales. Its rise has been limited by firming signals from Federal
Reserve officials of a possible rate decrease perhaps in two
weeks to counter risk from global trade tensions and sluggish
price growth at home.
    U.S. interest rates futures implied traders fully expect the
Fed to cut rates at its upcoming policy meeting on July 30-31
with a 35% chance for a half-point decrease, CME Group's
FedWatch tool showed.
    Fed policy-makers will release an assessment of the economy
with its latest Beige Book at 2 p.m. (1800 GMT).
    Moreover, the International Monetary Fund on Wednesday said
the greenback was overvalued by 6% to 12%, based on near-term
economic fundamentals, while the euro, Japan's yen and China's
yuan were seen as broadly in line with fundamentals.

    Wednesday's data on euro zone consumer price inflation,
which was revised up to 1.3% year-on-year in June, failed to
boost the euro.
    ECB board member Benoit Coeure said the ECB was ready to act
if necessary to help inflation in the euro zone move towards its
aim of close to but below 2%.    
    Nearly two ECB interest rate cuts of 10 basis points are
priced in by money markets for 2019.
========================================================
    Currency bid prices at 10:23AM (1423 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1217        $1.1209     +0.07%         -2.20%      +1.1222     +1.1201
 Dollar/Yen       JPY=        108.1800       108.2200    -0.04%         -1.89%      +108.3200   +108.1200
 Euro/Yen         EURJPY=     121.37         121.33      +0.03%         -3.84%      +121.4800   +121.2100
 Dollar/Swiss     CHF=        0.9883         0.9877      +0.06%         +0.70%      +0.9907     +0.9872
 Sterling/Dollar  GBP=        1.2426         1.2403      +0.19%         -2.59%      +1.2433     +1.2383
 Dollar/Canadian  CAD=        1.3066         1.3086      -0.15%         -4.19%      +1.3093     +1.3052
 Australian/Doll  AUD=        0.7004         0.7012      -0.11%         -0.64%      +0.7020     +0.6997
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1089         1.1074      +0.14%         -1.47%      +1.1110     +1.1071
 Euro/Sterling    EURGBP=     0.9026         0.9034      -0.09%         +0.47%      +0.9051     +0.9025
 NZ               NZD=        0.6725         0.6700      +0.37%         +0.12%      +0.6728     +0.6698
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5816         8.5727      +0.10%         -0.66%      +8.5933     +8.5719
 Euro/Norway      EURNOK=     9.6271         9.6101      +0.18%         -2.82%      +9.6334     +9.6107
 Dollar/Sweden    SEK=        9.3684         9.3884      -0.16%         +4.51%      +9.4048     +9.3650
 Euro/Sweden      EURSEK=     10.5100        10.5269     -0.16%         +2.40%      +10.5367    +10.5080
 
    
 (Additional reporting by Olga Cotaga in LONDON
Editing by Catherine Evans and Nick Zieminski)
  
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