July 15, 2019 / 2:27 PM / 5 months ago

FOREX-Dollar modestly higher in thin summer trading; upside limited

    * Currencies still driven by tug of war between central
    * Australian dollar reaches 10-day high after Chinese data
    * China's offshore yuan nudges upwards
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Recasts, adds new comment, FX table, updates prices, changes
byline, dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 15 (Reuters) - The dollar was little changed
to slightly higher on Monday in thin summer trading, with the
greenback's upside potential hampered by expectations the
Federal Reserve will cut interest rates at next week's policy
    Investors expect the Fed to reduce its key rate by 25 basis
points and make another cut in September. 
    Foreign exchange markets were quiet on Monday and volatility
low ahead of major central bank policy decisions next week. The
European Central Bank also holds a meeting next week, with
investors expecting a dovish statement.
    Money markets have priced in an ECB rate cut of 10 basis
points in September and another one in March. The ECB's meeting
on July 25 may reinforce those expectations.
    Forecasts for dovish moves by both the Fed and ECB have kept
euro/dollar stuck in a narrow range for weeks. 
    "Until we get the news out of the G7 central banks later in
this month and later into the summer, we are likely to remain
rather range-bound and relatively quiet," said Brad Bechtel,
managing director, Jefferies in New York. "Even then, we all
know what to expect, more or less."
    In mid-morning trading, an index that tracks the dollar
against a basket of six other major currencies was
slightly higher at 96.867.
    The dollar was little changed versus the yen at 107.865
    The euro was flat at $1.1266, trading within the
recent range of $1.14 to $1.11. 
    Investors are more bearish on the euro, since U.S. Treasury
yields look set to remain among the highest in developed markets
despite future Fed rate cuts, analysts say. 
    Some analysts, however, are surprised the euro is not
gaining given that the market has priced in Fed easing.
    "For the world's most-traded and least-exciting currency
pair, a dovish Fed, a weak-dollar president and a hint of global
economic optimism, 'ought' to mean euro/dollar rallies," said
Kit Juckes, FX strategist at Societe Generale.
    "If it (the euro) can't stage a move back to $1.14 in the
next week or two, what on earth could make it rally?" 
    Elsewhere, the Australian dollar, the currency most
sensitive to Chinese news, hit a more than one-week high on
stronger-than-expected economic data from China.
    China's industrial output rebounded in June from a 17-year
low in May, while June retail sales surged 9.8% from a year
    The Aussie was last up 0.1% at US$0.7031 against
the U.S. dollar, while China's offshore yuan was up 0.1% at
6.8742 yuan per dollar.
    Currency bid prices at 10:14 AM (1414 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1264        $1.1269     -0.04%         -1.79%      +1.1284     +1.1261
 Dollar/Yen       JPY=        107.8400       107.8900    -0.05%         -2.19%      +108.1000   +107.8100
 Euro/Yen         EURJPY=     121.52         121.60      -0.07%         -3.72%      +121.8400   +121.4800
 Dollar/Swiss     CHF=        0.9836         0.9840      -0.04%         +0.22%      +0.9854     +0.9818
 Sterling/Dollar  GBP=        1.2531         1.2573      -0.33%         -1.77%      +1.2579     +1.2525
 Dollar/Canadian  CAD=        1.3031         1.3029      +0.02%         -4.44%      +1.3042     +1.3021
 Australian/Doll  AUD=        0.7030         0.7017      +0.19%         -0.27%      +0.7038     +0.7009
 Euro/Swiss       EURCHF=     1.1082         1.1092      -0.09%         -1.53%      +1.1102     +1.1067
 Euro/Sterling    EURGBP=     0.8988         0.8960      +0.31%         +0.04%      +0.8998     +0.8961
 NZ               NZD=        0.6719         0.6690      +0.43%         +0.01%      +0.6734     +0.6679
 Dollar/Norway    NOK=        8.5419         8.5309      +0.13%         -1.12%      +8.5481     +8.5236
 Euro/Norway      EURNOK=     9.6246         9.6137      +0.11%         -2.84%      +9.6292     +9.6156
 Dollar/Sweden    SEK=        9.3611         9.3769      -0.24%         +4.44%      +9.3772     +9.3524
 Euro/Sweden      EURSEK=     10.5460        10.5710     -0.24%         +2.75%      +10.5690    +10.5460
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Olga Kotaga in London)
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