July 10, 2019 / 1:20 PM / 2 months ago

FOREX-Dollar weakens after gloomy Powell comments on U.S. economy

    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh
    * Fed's Powell says trade, global concerns weigh on U.S.
economy
    * Dollar hits session low vs yen, euro after Powell remarks
    * Markets expect 25 basis-point cut later this month

 (Adds analyst comments, updates prices)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, July 10 (Reuters) - The dollar fell on Wednesday
after Federal Reserve Chairman Jerome Powell struck a downbeat
tone in congressional testimony, saying trade uncertainties and
concerns about the global outlook continued to exert pressure on
the U.S. economy.
    The greenback hit session lows versus the euro and yen after
Powell's comments, which reinforced expectations the Fed will
cut interest rates for the first time in a decade at its next
monetary policy meeting later this month.
    In prepared remarks to a congressional committee, Powell
said the Fed stands ready to "act as appropriate" to sustain a
decade-long expansion. 
    He also contrasted the Fed's "baseline outlook" of continued
U.S. growth against a considerable set of risks - including
persistently weak inflation, slower growth in other major
economies, and a downturn in business investment driven by
uncertainty over just how long the Trump administration's trade
war with China and other countries will last and how intense it
will become.
    "There is now economic evidence that the outlook for the
U.S. economy is not that great," said Juan Perez, senior
currency trader at Tempus Inc in Washington. "Ultimately what
that means is that the Federal Reserve will need to intervene.
... And the dollar will get hurt as a result."
    Expectations for a 50-basis-point rate cut at a Fed meeting
later this month have evaporated, but investors still expect a
25-basis-point cut due to weak inflation and worries about
growing business fallout from the U.S.-China trade war.
    In midmorning trading, the dollar index slid 0.3% to 97.155
.
    Against the yen, the dollar fell 0.3% versus the yen to
108.657, dropping against the Swiss franc to 0.9894 franc
. 
    The euro, meanwhile, rose 0.4% to $1.1248.
    "If we see softer-than-expected inflation data tomorrow and
if the advance second-quarter GDP (gross domestic product)
reading comes in well below 2.0% on July 26th, we will see the
case grow for the first cut to be a 50-basis-point one," said
Edward Moya, senior market analyst at OANDA in New York.
    "Currently, markets see one cut in July and it's almost a
coin flip for another one in September." 
    
    ========================================================
    Currency bid prices at 9:12 AM (1312 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1246        $1.1206     +0.36%         -1.94%      +1.1254     +1.1202
 Dollar/Yen       JPY=        108.5600       108.8400    -0.26%         -1.54%      +108.9800   +108.5400
 Euro/Yen         EURJPY=     122.08         122.01      +0.06%         -3.28%      +122.3200   +121.9800
 Dollar/Swiss     CHF=        0.9892         0.9934      -0.42%         +0.79%      +0.9941     +0.9889
 Sterling/Dollar  GBP=        1.2515         1.2465      +0.40%         -1.90%      +1.2520     +1.2445
 Dollar/Canadian  CAD=        1.3072         1.3125      -0.40%         -4.14%      +1.3137     +1.3075
 Australian/Doll  AUD=        0.6956         0.6927      +0.42%         -1.32%      +0.6960     +0.6911
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1126         1.1135      -0.08%         -1.14%      +1.1139     +1.1121
 Euro/Sterling    EURGBP=     0.8984         0.8991      -0.08%         +0.00%      +0.9009     +0.8985
 NZ               NZD=        0.6645         0.6603      +0.64%         -1.07%      +0.6652     +0.6569
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5869         8.6505      -0.74%         -0.60%      +8.6637     +8.5859
 Euro/Norway      EURNOK=     9.6589         9.6960      -0.38%         -2.49%      +9.7129     +9.6598
 Dollar/Sweden    SEK=        9.4183         9.4712      -0.24%         +5.07%      +9.4799     +9.4134
 Euro/Sweden      EURSEK=     10.5940        10.6190     -0.24%         +3.22%      +10.6320    +10.5900
 
 (Reporting by Gertrude Chavez-Dreyfuss
Editing by Nick Zieminski and Jonathan Oatis)
  
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