July 8, 2019 / 6:55 PM / 3 months ago

CORRECTED-FOREX-Dollar hovers at three-week high as bets for deep U.S. rate cut fade

 (Corrects Powell's testimony to start on Wednesday not Tuesday in paragraph 2)
    * Traders shift focus to Fed's Powell two-day testimony
    * Markets reprice chance of big Fed cut after jobs data
    * Turkey's lira plunges after dismissal of cenbank governor
    * Sterling falls toward $1.25, close to six-month low
    * GRAPHIC-World FX rates in 2019: tmsnrt.rs/2egbfVh

    By Richard Leong
    NEW YORK, July 8 (Reuters) - The dollar edged up on Monday, hovering at a three-week high,
as it held onto gains after news of a stronger-than-expected increase in U.S. jobs in June
scaled back traders' expectations of a sharp Federal Reserve rate cut at the end of July.
    Traders await Fed Chairman Jerome Powell's two-day testimony before Congress, which starts
on Wednesday for clues about a rate decrease.
    "Foreign-exchange markets started the week on a quiet note, with currencies trading in tight
ranges, as traders shifted their focus from Friday’s strong U.S. payrolls data to testimony from
Federal Reserve Chairman Jerome Powell," said Ellis Phifer, senior market strategist at Raymond
James.
    Among emerging market currencies, the Turkish lira fell steeply after President Tayyip
Erdogan dismissed the central bank governor, sparking worries about the bank's independence.

    U.S. non-farm payrolls rebounded in June, rising the most in five months, the Labor
Department said on Friday.
    The solid job gain slashed expectations of a 50 basis-point rate cut at the Fed's July 30-31
policy meeting, although modest wage gains and other data showing the U.S. economy was losing
steam point to a quarter-point rate cut.
    "We do expect a July rate cut," said Alfonso Esparza, senior market analyst at Oanda in
Toronto. "The data have been mixed. They're not terrible. They're not great."
    In late U.S. trading, the dollar index was up 0.07% at 97.357, which was close to a
three-week high of 97.443 hit on Friday.
    The greenback's rebound follows a period of weakness as mounting expectations for Fed rate
cuts weighed.
    The dollar strengthened 0.18% to 108.675 yen after hitting 108.73, which was the
highest since June 11. 
    The euro was marginally lower at $1.1215 after hitting $1.1208 on
Friday, which was the lowest since Jan. 3.
    The common currency has been under pressure from dollar strength and weakness in the German
industrial sector.
    The British pound, which hit a six-month low below $1.25 on Friday after poor economic data
and on heightened expectations that the Bank of England will cut interest rates in 2020, fell 
0.15% to $1.2516. 
    Turkey's lira at one point slid to a two-week low of 5.8245 to the dollar and
was last down 1.91% at 5.742 after Erdogan dismissed the central bank Governor Murat Cetinkaya.
    In a written statement on Saturday, new governor Murat Uysal, Cetinkaya's deputy, said he
would implement monetary policy instruments independently with a focus on achieving and
maintaining the primary objective of price stability. 
    
    Currency bid prices at 1440 EDT (1840 GMT):
 Description      RIC      Last      U.S. Close  Pct      YTD Pct   High Bid   Low Bid
                                     Previous    Change   Change               
                                     Session                                   
 Euro/Dollar      EUR=     $1.1214   $1.1224     -0.09%   -2.22%    +1.1234    +1.1208
 Dollar/Yen       JPY=     108.6700  108.4500    +0.20%   -1.44%    +108.7200  +108.2900
 Euro/Yen         EURJPY=  121.86    121.75      +0.09%   -3.45%    +121.9300  +121.5200
 Dollar/Swiss     CHF=     0.9935    0.9915      +0.20%   +1.23%    +0.9946    +0.9900
 Sterling/Dollar  GBP=     1.2516    1.2523      -0.06%   -1.89%    +1.2539    +1.2501
 Dollar/Canadian  CAD=     1.3086    1.3075      +0.08%   -4.04%    +1.3099    +1.3049
 Australian/Doll  AUD=     0.6972    0.6979      -0.10%   -1.09%    +0.6994    +0.6968
 ar                                                                            
 Euro/Swiss       EURCHF=  1.1144    1.1134      +0.09%   -0.98%    +1.1152    +1.1114
 Euro/Sterling    EURGBP=  0.8959    0.8958      +0.01%   -0.28%    +0.8973    +0.8955
 NZ               NZD=     0.6628    0.6627      +0.02%   -1.33%    +0.6652    +0.6623
 Dollar/Dollar                                                                 
 Dollar/Norway    NOK=     8.6410    8.6177      +0.27%   +0.03%    +8.6457    +8.6007
 Euro/Norway      EURNOK=  9.6909    9.6732      +0.18%   -2.17%    +9.6930    +9.6603
 Dollar/Sweden    SEK=     9.4584    9.4412      -0.01%   +5.52%    +9.4654    +9.4222
 Euro/Sweden      EURSEK=  10.6068   10.6077     -0.01%   +3.34%    +10.6150   +10.5830
 
    
 (Additional reporting by Tommy Wilkes in LONDON; Editing by Lisa Shumaker)
  
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