September 18, 2019 / 1:52 PM / a month ago

FOREX-Dollar edges higher as Fed rate decision looms

    * Fed likely to deliver hawkish cut-analyst
    * Dollar holds near 7-week high vs yen 
    * Graphic: World FX rates in 2019 tmsnrt.rs/2egbfVh

 (Updates prices, adds new comment, FX table, changes byline,
dateline; previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Sept 18 (Reuters) - The dollar rose on Wednesday
and was trading near a seven-week high against the yen, ahead of
a Federal Reserve policy meeting where officials are widely
expected to cut interest rates by a quarter of a percentage
point.
    Many investors, however, were pricing in less aggressive
action from the Fed going forward as inflationary pressures and
wage growth have been steady, even as pockets of the U.S.
economy, such as the service sector, have shown steady
improvement.
    "The Fed is likely to deliver a hawkish cut, reflecting a
mix of positioning and expectations," said Mark McCormick,
global head of FX strategy, at TD Securities in New York. "The
Fed will leave room to do more...and the dots are unlikely to
offer a crystal clear path to steeper cuts down the road."
    Fed officials' median projection on the number of rate moves
is commonly referred to as its "dot-plot."
    In morning trading, the dollar edged up 0.1% to 108.18 yen,
just below a seven-week high of 108.37 yen tested overnight. The
dollar index, tracking the unit against a basket of other
currencies, rose 0.1% to 98.352.
    With recent economic data proving to be strong -- a
Citigroup U.S. economic surprise index is holding at
its highest levels this year -- some market participants are
buying the dollar in case the Fed signals a more confident view.
    "All in, we think the meeting outcome risks disappointing
market expectations, which are perhaps leaning towards a more
dovish outcome, resulting in a renewed bid for the dollar,"
Scotiabank strategists said.    
    The dollar has been driven more by trade tensions between
Washington and Beijing this year than by U.S. monetary policy,
analysts said. The dollar has gained nearly 1% against the yen
since the last rate cut in July.
    A retreat in global oil prices also restored some calm to
markets. Oil prices fell in Asia, extending Tuesday's 6%
decline, after Saudi Arabia's energy minister said the kingdom
had tapped stockpiles to restore oil supplies to where they
stood before weekend attacks shut around 5% of global output.

    The euro slipped 0.1% to $1.1056, still higher than the
$1.0927 reached last week, the lowest in more than two years.
    After the Fed releases its policy decision, attention will
turn to the Bank of Japan's meeting ending on Thursday, to see
whether it eases policy, too.
    Deepening negative rates will be an option if the BOJ eases,
although the central bank may accompany that with measures to
mitigate the pain on financial institutions, sources have told
Reuters.       
    
    ========================================================
    Currency bid prices at 9:33AM (1333 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1053        $1.1071     -0.16%         -3.63%      +1.1075     +1.1037
 Dollar/Yen       JPY=        108.1600       108.1200    +0.04%         -1.90%      +108.2700   +108.0900
 Euro/Yen         EURJPY=     119.57         119.69      -0.10%         -5.27%      +119.8100   +119.4200
 Dollar/Swiss     CHF=        0.9956         0.9930      +0.26%         +1.45%      +0.9962     +0.9927
 Sterling/Dollar  GBP=        1.2466         1.2500      -0.27%         -2.28%      +1.2510     +1.2440
 Dollar/Canadian  CAD=        1.3253         1.3241      +0.09%         -2.82%      +1.3271     +1.3240
 Australian/Doll  AUD=        0.6840         0.6864      -0.35%         -2.97%      +0.6869     +0.6830
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1008         1.0994      +0.13%         -2.19%      +1.1010     +1.0985
 Euro/Sterling    EURGBP=     0.8866         0.8855      +0.12%         -1.31%      +0.8880     +0.8852
 NZ               NZD=        0.6333         0.6356      -0.36%         -5.72%      +0.6362     +0.6330
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.9353         8.9210      +0.16%         +3.43%      +8.9712     +8.9245
 Euro/Norway      EURNOK=     9.8778         9.8792      -0.01%         -0.28%      +9.9062     +9.8780
 Dollar/Sweden    SEK=        9.6961         9.6693      +0.10%         +8.17%      +9.7274     +9.6669
 Euro/Sweden      EURSEK=     10.7189        10.7078     +0.10%         +4.43%      +10.7431    +10.7040
 
    
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Saikat Chatterjee in London; Editing by Bernadette Baum)
  
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