August 27, 2018 / 2:35 PM / a month ago

FOREX-Dollar weakens after Powell speech suggests slower tightening pace

    * Fed tightening cycle nearing end -analyst
    * Mexican peso rises as NAFTA talks seen nearing agreement
    * Turkish lira slides 2.2 percent as markets reopen
    * Graphic: World FX rates in 2018 tmsnrt.rs/2egbfVh

 (Recasts, updates prices, adds comment, changes dateline;
previous LONDON)
    By Gertrude Chavez-Dreyfuss
    NEW YORK, Aug 27 (Reuters) - The dollar fell for a second
straight session on Monday, still weighed down by comments from
Federal Reserve Chairman Jerome Powell on Friday that seemed to
suggest a slower pace of monetary tightening.
    Since hitting a more than one-year high in mid-August, the
dollar has fallen more than 2 percent amid remarks from U.S.
President Donald Trump criticizing the Fed for raising interest
rates at a time when the government was trying to stimulate the
economy.
     At a symposium in Jackson Hole, Wyoming, Powell on Friday
emphasized the central bank's push to raise interest rates
despite Trump's criticism of higher borrowing costs. But he also
said the Fed sees no clear sign of inflation accelerating above
2 percent.
    His comments did little to change market expectations for
rate hikes in September and December and disappointed some
dollar bulls hoping for a more hawkish message.
    "The takeaway from Jackson Hole is that the Fed may not look
to tighten much more than is currently priced into markets,"
said Mark McCormick, North American head of FX strategy at TD
Securities in Toronto. 
    "It is clear the Fed cycle is close to nearing the
end-game," he added.
    Interest rate hike expectations have supported the dollar
this year as the U.S. economy tracked a stable growth path.
    The Treasury yield curve on Monday reached its
flattest since 2007 - a factor seen as reducing support for the
dollar - in the wake of Powell's speech.
    In mid-morning trading, the dollar index, which measures the
greenback against a basket of six major currencies, was
down 0.2 percent at 94.97 after slipping more than 0.5 percent
in the previous session.
    The euro rose 0.2 percent to $1.1647 after climbing
as high as $1.1654, its strongest since Aug. 2. The currency
advanced more than 0.7 percent on Friday.
    Overall, financial markets showed a healthier appetite for
risk as U.S. stocks rose, curbing the U.S. currency's safe-haven
appeal.
    Adding to the risk-on mood, U.S. and Mexican trade
negotiators appeared close to reaching a common position on
NAFTA, with Mexico's economy minister saying an announcement was
"probably on the agenda."
    The Mexican peso rose 1 percent against the dollar,
which traded at 18.703 pesos. 
    In emerging markets, the Turkish lira weakened more than 2
percent against the dollar on Monday after a week-long holiday,
hit by persisting concern about a diplomatic rift with
Washington over a detained U.S. pastor.
    
    ========================================================
    Currency bid prices at 10:14AM (1414 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1654        $1.1621     +0.28%         -2.85%      +1.1657     +1.1594
 Dollar/Yen       JPY=        111.0300       111.2200    -0.17%         -1.46%      +111.3600   +110.9400
 Euro/Yen         EURJPY=     129.39         129.26      +0.10%         -4.28%      +129.6700   +128.8200
 Dollar/Swiss     CHF=        0.9819         0.9831      -0.12%         +0.78%      +0.9845     +0.9814
 Sterling/Dollar  GBP=        1.2878         1.2843      +0.27%         -4.69%      +1.2888     +1.2830
 Dollar/Canadian  CAD=        1.2998         1.3027      -0.22%         +3.35%      +1.3067     +1.3003
 Australian/Doll  AUD=        0.7336         0.7324      +0.16%         -5.99%      +0.7345     +0.7308
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1443         1.1425      +0.16%         -2.10%      +1.1444     +1.1411
 Euro/Sterling    EURGBP=     0.9049         0.9047      +0.02%         +1.87%      +0.9059     +0.9034
 NZ               NZD=        0.6687         0.6690      -0.04%         -5.63%      +0.6701     +0.6671
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.3325         8.3261      +0.08%         +1.53%      +8.3676     +8.3174
 Euro/Norway      EURNOK=     9.7134         9.6815      +0.33%         -1.37%      +9.7175     +9.6763
 Dollar/Sweden    SEK=        9.1151         9.1248      +0.15%         +11.14%     +9.1561     +9.1010
 Euro/Sweden      EURSEK=     10.6231        10.6068     +0.15%         +7.97%      +10.6310    +10.5970
 
 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by
Tom Finn in London; Editing by Dan Grebler)
  
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