August 22, 2019 / 2:22 PM / 5 months ago

FOREX-Dollar slips as Jackson Hole meeting gets underway; focus on Powell's speech

    * Markets expect Fed's Powell to clarify Fed minutes
    * Euro PMIs better than expected
    * Chinese yuan hits 11-year low vs dollar, fans trade worries
    * Graphic: World FX rates in 2019

 (New throughout, updates prices, market activity, FX table and comments; new byline,  changes dateline,
previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Aug 22 (Reuters) - The dollar weakened on Thursday as investors braced for a possible
announcement or statement from the Federal Reserve at this week's Jackson Hole, Wyoming event that would
help address the worsening global economic outlook.
    Market participants expect the Fed announcement could be a stimulus measure, or an affirmation that
the U.S. central bank is on a steady path to ease interest rates, a scenario viewed as negative for the
    Fed Chairman Jerome Powell will speak on Friday and expectations are building that he will clarify Fed
minutes released on Wednesday and deliver a dovish speech that would soothe market worries about the
prospect of recession.
    The Fed's latest minutes confirmed a growing view that U.S. policymakers are reluctant to begin a big
rate-cutting cycle in the coming months, describing the July easing as a mid-cycle adjustment.
    The minutes showed policymakers were divided over whether to cut interest rates but united in wanting
to signal they were set on more cuts.
    "Jackson Hole is going to provide an opportunity for the Fed to correct that communication mistake in
the minutes," said Edward Moya, senior market analyst at OANDA in New York.
    "With the rest of the world going negative in interest rates, the risk is for that scenario to happen
in the U.S. and if we don't see the Fed become a little more aggressive through no fault of the U.S.
economy, but more because of the rest of the world, they could see more pressure to deliver rate cuts," he
    In morning trading, the dollar slipped 0.1% against a basket of major currencies to 98.218. 
    The greenback also fell against the yen as well, down 0.2% at 106.37 yen, not far from last
week's eight-month low around 105.05.
    The euro, meanwhile, edged higher against the dollar, up 0.1% at $1.1097, amid an uptick in euro zone
business growth.
    Euro zone business growth picked up in August, as services expanded and manufacturing contracted at a
slower pace. But trade war fears knocked future expectations to their weakest in over six years, a survey
    "Though the eurozone PMI data was slightly better than expected, it is fairly gloomy stuff and there
is some degree of concern among investors about the Chinese yuan's decline," said Neil Mellor, a senior FX
strategist at BNY Mellon in London.
    Investors also sold Asian currencies after the Chinese yuan fell to an 11-year low against the dollar,
indicating trade tension between the world's two biggest economies remained a major issue. 
    In onshore trading, the yuan fell to 7.0752 per dollar, its weakest since March 2008,
before recovering to 7.0732. In offshore trade, the dollar rose 0.29% to 7.0872 yuan.
    Currency bid prices at 10:02 AM (1402 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1090        $1.1083     +0.06%         -3.30%      +1.1112     +1.1064
 Dollar/Yen       JPY=        106.3600       106.6100    -0.23%         -3.54%      +106.6400   +106.2600
 Euro/Yen         EURJPY=     117.98         118.16      -0.15%         -6.53%      +118.2900   +117.7400
 Dollar/Swiss     CHF=        0.9830         0.9823      +0.07%         +0.14%      +0.9844     +0.9815
 Sterling/Dollar  GBP=        1.2251         1.2126      +1.03%         -3.97%      +1.2265     +1.2109
 Dollar/Canadian  CAD=        1.3281         1.3289      -0.06%         -2.61%      +1.3315     +1.3275
 Australian/Doll  AUD=        0.6769         0.6780      -0.16%         -3.97%      +0.6787     +0.6759
 Euro/Swiss       EURCHF=     1.0902         1.0888      +0.13%         -3.13%      +1.0919     +1.0876
 Euro/Sterling    EURGBP=     0.9053         0.9138      -0.93%         +0.77%      +0.9157     +0.9043
 NZ               NZD=        0.6383         0.6402      -0.30%         -4.97%      +0.6407     +0.6372
 Dollar/Norway    NOK=        8.9630         8.9442      +0.21%         +3.75%      +8.9826     +8.9372
 Euro/Norway      EURNOK=     9.9428         9.9123      +0.31%         +0.36%      +9.9550     +9.9145
 Dollar/Sweden    SEK=        9.6614         9.6230      +0.45%         +7.78%      +9.6838     +9.5967
 Euro/Sweden      EURSEK=     10.7177        10.6695     +0.45%         +4.42%      +10.7323    +10.6568
 (Reporting by Gertrude Chavez-Dreyfuss: Additional reporting by Saikat Chatterjee in London; Editing by
David Gregorio)
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