- Traders see just below 50% chance of ECB's cutting rates
- BOJ will pay attention to rising global uncertainties -Kuroda
- Falling U.S. yields pare dollar's gain vs euro
- Swiss franc hits two-year high vs euro on safe-haven demand
- GRAPHIC-World FX rates in 2019: http://tmsnrt.rs/2egbfVh
(Updates market action, adds quote)
The dollar and euro were little changed on Monday as traders await decisions by the U.S. Federal Reserve and the European Central Bank on how much and how fast they may reduce interest rates, beginning with the ECB on Thursday.
Traders see about a 46% probability that European policymakers will lower a key deposit rate by 10 basis points to -0.50 basis point to combat risk from global trade tensions and anemic regional inflation, based on local interest rates markets. ECBWATCH
"The market is just waiting for what Draghi has to say about policy," said Brendan McKenna, currency strategist at Wells Fargo Securities, referring to ECB President Mario Draghi.
Rising chances of European interest rates sliding deeper into negative territory pressured the euro lower against the dollar and propelled the Swiss franc to a two-year peak against the single currency.
The greenback has been bogged down by bets the Federal Reserve will likely cut U.S. interest rates for the first time in a decade, also in response to global trade tensions and weak inflation. Data published late on Friday showed speculators dialed back their net bullish positions in the dollar against other G10 currencies to their lowest level in a year.
In late U.S. trading, the euro EUR=EBS was little changed at $1.1212, rebounding from a session low of $1.1207.
The dollar moved lower in step with U.S. yields. The two-year Treasury yield US2YT=RR slipped to 1.801% early on Monday, which was below the Fed's current target range of 2.25%-2.50% USFOMC=ECI on short-term rates.
An index that tracks the greenback against a basket of currencies .DXY was fractionally higher at 97.241.
U.S. rates futures implied traders positioned for a 23% chance the U.S. central bank may lower its rate range by a bold half point at its July 30-31 policy meeting, compared with 24% late on Friday, according to CME Group's FedWatch tool.
"It doesn't look like they will be too aggressive with a cut next week," McKenna said. "This is more of an insurance cut and not a start of a prolonged easing cycle. The U.S. economy is still pretty strong."
Rates futures had rallied on Thursday with perceived chances for a half-point rate cut soaring to 71% after a dovish speech by New York Fed President John Williams. Those bets abated after a Fed spokesman clarified that the remarks did not refer to "potential policy actions."
On Monday the yen did not move much, at 107.88 versus the dollar JPY=EBS and 120.95 against the euro EURJPY=EBS , after Bank of Japan Governor Haruhiko Kuroda said the central bank will monitor the impact of growing global uncertainties.
The Swiss franc EURCHF=EBS fell to 1.0999 franc per euro earlier on Monday, which was its strongest level against the common currency since July 2017.
======================================================== Currency bid prices at 2:48PM (1848 GMT)Description RIC Last U.S. Pct YTD Pct High Bid Low Bid Close Change Change Previous Session Euro/Dollar EUR= $1.1212 $1.1220 -0.07% -2.26% +1.1225 +1.1207 Dollar/Yen JPY= 107.8700 107.7000 +0.16% -2.17% +108.0600 +107.7100 Euro/Yen EURJPY= 120.95 120.86 +0.07% -4.18% +121.1600 +120.8100Dollar/Swiss CHF= 0.9816 0.9816 +0.00% +0.02% +0.9840 +0.9804 Sterling/Dollar GBP= 1.2482 1.2500 -0.14% -2.16% +1.2520 +1.2456Dollar/Canadian CAD= 1.3109 1.3060 +0.38% -3.87% +1.3119 +1.3041 Australian/Doll AUD= 0.7036 0.7042 -0.09% -0.18% +0.7057 +0.7032 ar Euro/Swiss EURCHF= 1.1008 1.1014 -0.05% -2.19% +1.1035 +1.1000 Euro/Sterling EURGBP= 0.8982 0.8971 +0.12% -0.02% +0.9000 +0.8963
NZ NZD= 0.6767 0.6761 +0.09% +0.74% +0.6786 +0.6758 Dollar/DollarDollar/Norway NOK= 8.6078 8.5717 +0.42% -0.36% +8.6084 +8.5686 Euro/Norway EURNOK= 9.6515 9.6180 +0.35% -2.57% +9.6534 +9.6129Dollar/Sweden SEK= 9.4064 9.3774 +0.19% +4.93% +9.4145 +9.3825 Euro/Sweden EURSEK= 10.5480 10.5279 +0.19% +2.77% +10.5589 +10.5206<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Net speculative U.S. dollar positioning http//tmsnrt.rs/32FPnYIGRAPHIC-Bets on bold first rate-cut from the Fed http//tmsnrt.rs/2XTkkpn GRAPHIC-Bets on bold first rate-cut from the Fed interactive http//tmsnrt.rs/2Y3UHTf GRAPHIC-Swiss franc vs euro http//tmsnrt.rs/32LkdiS
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