July 8, 2019 / 4:00 PM / 3 months ago

CORRECTED-FOREX-Dollar hovers at 3-week high on reduced bets for deep U.S. rate cut

 (Corrects Powell's testimony to start on Wednesday not Tuesday
in 2nd paragraph)
    * Traders shift focus to Fed's Powell 2-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 on to 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. 
    At 11:34 a.m. (1534 GMT), the dollar index was up
0.08% at 97.359, which was close to a 3-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 108.67 yen after
hitting 108.73, which was the highest since June 11. 
    The euro was marginally lower at $1.1214 after
hitting $1.1208 on Friday.
    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 
0.22% to $1.2508. 
    Turkey's lira at one point slid to a two-week low of 5.8245
to the dollar and was last down 1.59% at 5.724.
    "Some naive market participants might still hope that the
new central bank governor will come across as being independent
in a statement announced for this week and at least does not cut
interest rates right away," Commerzbank analysts said. 
    "That may be the case but does not change the fact that
medium term sensible Turkish monetary policy will not be
    In a written statement on Saturday, new governor Murat Uysal
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 11:35 AM (1535 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1212        $1.1224     -0.11%         -2.24%      +1.1234     +1.1211
 Dollar/Yen       JPY=        108.6500       108.4500    +0.18%         -1.46%      +108.7200   +108.2900
 Euro/Yen         EURJPY=     121.83         121.75      +0.07%         -3.48%      +121.9200   +121.5200
 Dollar/Swiss     CHF=        0.9934         0.9915      +0.19%         +1.22%      +0.9946     +0.9900
 Sterling/Dollar  GBP=        1.2509         1.2523      -0.11%         -1.94%      +1.2539     +1.2501
 Dollar/Canadian  CAD=        1.3085         1.3075      +0.08%         -4.05%      +1.3099     +1.3049
 Australian/Doll  AUD=        0.6969         0.6979      -0.14%         -1.16%      +0.6994     +0.6969
 Euro/Swiss       EURCHF=     1.1140         1.1134      +0.05%         -1.01%      +1.1152     +1.1114
 Euro/Sterling    EURGBP=     0.8964         0.8958      +0.07%         -0.22%      +0.8973     +0.8955
 NZ               NZD=        0.6624         0.6627      -0.05%         -1.38%      +0.6652     +0.6624
 Dollar/Norway    NOK=        8.6370         8.6177      +0.22%         -0.02%      +8.6450     +8.6007
 Euro/Norway      EURNOK=     9.6872         9.6732      +0.14%         -2.21%      +9.6906     +9.6603
 Dollar/Sweden    SEK=        9.4579         9.4412      +0.00%         +5.51%      +9.4648     +9.4222
 Euro/Sweden      EURSEK=     10.6075        10.6077     +0.00%         +3.35%      +10.6146    +10.5830

 (Additional reporting by Tommy Wilkes in LONDON
Editing by Jan Harvey and Steve Orlofsky)
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