- Longest U.S. economic expansion stay intact - Fed's Beige Book
- Dollar overvalued; euro, yen, yuan in line - IMF
- Sterling recovers after hitting 27-month low vs dollar
- Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates market action, adds quote)
The dollar softened against most major currencies on Wednesday in step with lower U.S. bond yields and expectations the Federal Reserve would lower interest rates, reversing some of the prior day's gains tied to stronger-than-forecast retail sales data.
The pound fell to 27-month lows versus the greenback on jitters about a no-deal Brexit before rebounding in U.S. trading.
"With the market pricing for lower interest rates, that's keeping a lid on the dollar," said Chris Gaffney, president of world markets at TIAA Bank in St. Louis.
The greenback was also bogged down by uncertainties whether the White House would embark on efforts to weaken the dollar in the wake of comments from U.S. President Donald Trump who said on Twitter on July 3 the United States "should match" the "big currency manipulation game" by China and Europe.
"Anytime you have the president commenting on the need for a weaker dollar, that would pressure the dollar lower," Gaffney said.
Moreover, the International Monetary Fund on Wednesday said the greenback was overvalued by 6% to 12%, based on near-term economic fundamentals, while the euro, Japan's yen and China's yuan were seen as broadly in line with fundamentals.
The euro hit a one-week low against the dollar and towards the lower end of this year's trading range, weighed down by expectations of easing from the European Central Bank and investors' preference for the higher-yielding U.S. currency.
The euro EUR=EBS fell to $1.1200 earlier Wednesday before clawing back up 0.10% on the day to $1.1223.
The dollar JPY=EBS was 0.13% lower at 108.095 yen. The pound GBP=D3 fell to a fresh 27-month low of $1.2382 before rebounding to $1.2433. It also hit a fresh six-month low against the euro at 90.51 pence EURGBP=D3 .
An index that tracks the dollar against the euro, yen, pound and three other currencies .DXY was down 0.20% at 97.204 after touching a one-week high.
Benchmark U.S. 10-year yields US10YT=RR fell 5.70 basis points to 2.063%.
The greenback has strengthened since late June in response to better-than-expected data on U.S. jobs, inflation and retail sales. Its rise has been limited by stronger signals from Federal Reserve officials of a possible rate decrease perhaps in two weeks to counter the risk from global trade tensions and sluggish price growth at home.
The Fed's latest Beige Book on Wednesday showed the longest U.S. economic expansion remained intact amid risk from trade disputes.
U.S. interest rates futures implied traders fully expect the Fed to cut rates at its upcoming policy meeting on July 30-31 with a 35% chance for a half-point decrease, CME Group's FedWatch tool showed.
======================================================== Currency bid prices at 2:50PM (1850 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1221 $1.1209 +0.11% -2.16% +1.1233 +1.1201 Dollar/Yen JPY= 108.0900 108.2200 -0.12% -1.97% +108.3200 +108.0200 Euro/Yen EURJPY= 121.30 121.33 -0.02% -3.90% +121.4800 +121.2100 Dollar/Swiss CHF= 0.9869 0.9877 -0.08% +0.56% +0.9907 +0.9866 Sterling/Dollar GBP= 1.2434 1.2403 +0.25% -2.53% +1.2456 +1.2383 Dollar/Canadian CAD= 1.3046 1.3086 -0.31% -4.33% +1.3093 +1.3035 Australian/Doll AUD= 0.7015 0.7012 +0.04% -0.48% +0.7024 +0.6997 arEuro/Swiss EURCHF= 1.1078 1.1074 +0.04% -1.56% +1.1110 +1.1071 Euro/Sterling EURGBP= 0.9024 0.9034 -0.11% +0.45% +0.9051 +0.9015 NZ NZD= 0.6737 0.6700 +0.55% +0.30% +0.6746 +0.6698 Dollar/DollarDollar/Norway NOK= 8.5816 8.5727 +0.10% -0.66% +8.5933 +8.5653 Euro/Norway EURNOK= 9.6284 9.6101 +0.19% -2.80% +9.6348 +9.6107 Dollar/Sweden SEK= 9.3635 9.3884 -0.16% +4.46% +9.4048 +9.3540 Euro/Sweden EURSEK= 10.5101 10.5269 -0.16% +2.40% +10.5367 +10.5069 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ GRAPHIC-Trade tensions boost U.S. rate-cut expectations http//tmsnrt.rs/2KdE2byGRAPHIC-Bets on bold first rate-cut from the Fed interactive http//tmsnrt.rs/2Y3UHTf GRAPHIC-Bets on bold first rate-cut from the Fed http//tmsnrt.rs/2XTkkpn GRAPHIC-Trade tensions boost U.S. rate-cut expectations interactive http//tmsnrt.rs/2KdDNxa GRAPHIC-Euro 1-month implied volatility http//tmsnrt.rs/2NYofAO GRAPHIC-Euro net short positions http//tmsnrt.rs/32uh2f7 GRAPHIC-Bund yield set to fall below ECB deposit rate http//tmsnrt.rs/2YqE2cu GRAPHIC-Bund yield set to fall below ECB deposit rate interactive http//tmsnrt.rs/2YtKj7d
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