Investors brace for dovish Fed at Jackson Hole U.S. yield curve...

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    • Investors brace for dovish Fed at Jackson Hole
    • U.S. yield curve steeper, but may invert again
    • Pound plunges vs euro, dollar
    • Euro flat as markets focus on Italy
    • Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

    (Adds analyst comment, updates prices)

    The dollar declined on Tuesday, in line with the drop in Treasury yields, as investors braced for a potentially dovish Federal Reserve at a Jackson Hole, Wyoming, gathering later this week, with many expecting an announcement of some measure that would ease U.S. recession concerns.

    Risk aversion crept into the market a day after investors cheered the prospect of new stimulus measures from global central banks to shore up their struggling economies.

    Markets also cautiously awaited Fed Chairman Jerome Powell's speech on Friday in Jackson Hole. "There are a lot of recession signs and the expectation is that Chairman Powell will address them and probably say we are looking to cut," said Juan Perez, senior FX trader and analyst at Tempus Inc in Washington.

    "What the market is trying to digest is that there are serious signs that have been here with a precedent prior to a recession. Of course, the inverted curve is a major one. Ultimately, safe havens are going to keep going up," he added.

    That said, market sentiment was not as distressing as that of last week, some analysts said, when the U.S. bond yield curve inverted, a sign many investors say presages a recession.

    The curve of 2-year and 10-year Treasury yields, however, was steeper on Tuesday US2US10=RR , but could invert again based on past cycles.

    "We think a long yen exposure makes sense ahead of the Fed's Jackson Hole event," Scotiabank said in a research note." If Fed Chairman Powell sounds dovish, U.S. yields and the U.S. dollar should fall; if he sounds more hawkish, safe havens should rally."

    In afternoon trading, the dollar fell 0.4% against the yen to 106.24 yen JPY= and was down 0.4% versus the Swiss franc at 0.9777 franc CHF= .

    The dollar index was down 0.2% at 98.166 .DXY after earlier rising to a 2-1/2-week high of 98.40. It reached its 2019 high of 98.932 at the beginning of the month.

    The euro rose 0.2% against the dollar to $1.1102 EUR= after Italy's prime minister, Giuseppe Conte, announced his resignation on Tuesday even as he made a blistering attack on his own interior minister, Matteo Salvini. Conte accused Salvini of sinking the ruling coalition and endangering the economy for personal and political gain.

    The pound was down 0.3% against the dollar at $1.2170 GBP=D3 and slipped 0.1% versus the euro to 91.20 pence EURGBP=D3 .

    British Prime Minister Boris Johnson fired the opening salvo in his bid to renegotiate the country's divorce terms from the EU, saying the "backstop" - an insurance policy included in Britain's Withdrawal Agreement with the EU to avoid the return of a hard border on the island of Ireland - should be replaced with a pledge.

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    	Currency bid prices at 3:37 PM (1937 GMT) 
    
     Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
    											  Previous				   Change				  
    											  Session											
     Euro/Dollar	  EUR=		$1.1101		$1.1076	 +0.23%		 -3.21%	  +1.1106	 +1.1067 
     Dollar/Yen	   JPY=		106.2300	   106.6200	-0.37%		 -3.65%	  +106.6800   +106.1900 
     Euro/Yen		 EURJPY=	 117.94		 118.11	  -0.14%		 -6.56%	  +118.2600   +117.5900 
     Dollar/Swiss	 CHF=		0.9776		 0.9814	  -0.39%		 -0.39%	  +0.9818	 +0.9775 
     Sterling/Dollar  GBP=		1.2167		 1.2125	  +0.35%		 -4.62%	  +1.2181	 +1.2065 
     Dollar/Canadian  CAD=		1.3311		 1.3323	  -0.09%		 -2.39%	  +1.3344	 +1.3308 
     Australian/Doll  AUD=		0.6778		 0.6762	  +0.24%		 -3.84%	  +0.6795	 +0.6755 
     ar																							  
    
     Euro/Swiss	   EURCHF=	 1.0856		 1.0875	  -0.17%		 -3.54%	  +1.0881	 +1.0846 
     Euro/Sterling	EURGBP=	 0.9123		 0.9133	  -0.11%		 +1.55%	  +0.9183	 +0.9103 
     NZ			   NZD=		0.6415		 0.6409	  +0.09%		 -4.50%	  +0.6429	 +0.6404 
     Dollar/Dollar																				   
    
     Dollar/Norway	NOK=		8.9861		 8.9755	  +0.12%		 +4.02%	  +9.0212	 +8.9701 
     Euro/Norway	  EURNOK=	 9.9767		 9.9465	  +0.30%		 +0.71%	  +9.9941	 +9.9420 
     Dollar/Sweden	SEK=		9.6837		 9.6849	  +0.21%		 +8.03%	  +9.7328	 +9.6776 
     Euro/Sweden	  EURSEK=	 10.7527		10.7297	 +0.21%		 +4.76%	  +10.7791	+10.7230 
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    DXY index rises towards 2019 high	http//tmsnrt.rs/2Njp8SE 
    
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