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FOREX-Dollar stalled awaiting signals on trade and Fed policy


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* Dollar little changed in morning trade

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Recasts; adds analyst quote; changes dateline, previousLONDON)

By Kate Duguid

NEW YORK, May 20 (Reuters) - The dollar was little changedon Monday morning but maintained last week's gains as investorsheld off on big moves while awaiting developments in U.S-Chinatrade negotiations and for insight into the Federal Reserve'sthinking on interest-rate policy.

China on Monday accused the United States of harboring"extravagant expectations" for a trade deal, underlining thegulf between the two sides as U.S. action against Chinesetechnology giant Huawei began hitting the global tech sector. urn:newsml:reuters.com:*:nL2N22W044 The dollar index .DXY , which measures thegreenback against a basket of six currencies, was down 0.06%,little moved by the bickering.

Against the euro EUR= , the dollar was slightly weaker,last down 0.07%.

The dollar was also on hold ahead of Jerome Powell's speechlater Monday, which should offer insight into the Fed chair'sthinking about interest rates and the effects trade tensions mayhave on the U.S. economy. On Wednesday, the Federal Open MarketCommittee will release minutes from its last meeting, whichinvestors hope will show what prompted the policymakers tostrike a broadly neutral stance this month.

Powell's speech on Monday "will be something we're watchingvery closely to see if there are any comments from the FederalReserve as to if they feel there will be a change in theiroutlook ... because of the increased trade tensions," and "whatthey will be doing going forward," said Chuck Tomes, portfoliomanager at Manulife Asset Management.

At its May 1 meeting, the Fed decided to keep interest ratessteady and signaled little appetite to adjust them any timesoon, taking note of strong job growth. urn:newsml:reuters.com:*:nS0N21R01C

Since then, trade tensions between Washington and Beijinghave escalated, casting a shadow on the outlook of global growthand fueling expectations the U.S. central bank will have to cutinterest rates in the coming months.

Increased expectations of rate cuts so far have had littleimpact on the dollar, though it has found some strength from theescalating trade tensions as investors have turned to it as asafe haven. Still, positioning data suggested that strength maybe temporary, as investors have trimmed some of their longpositions in the U.S. currency against both its developed andemerging market rivals.

Market strategists note the implied yields on U.S. futurescontracts are starting to price in a second rate cut this yearas concerns have mounted.

"As such, these (Fed) minutes will take on addedsignificance as markets try to figure out the Fed's truemessage," said Win Thin, global head of currency strategy atBrown Brothers Harriman in New York.

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(Reporting by Kate Duguid and Saikat Chatterjee; editing byJonathan Oatis) ((kate.duguid@thomsonreuters.com; +646-223-6118; ReutersMessaging: kate.duguid@thomsonreuters.com@thomsonreuters.net))






This article appears in: Politics , Stocks , World Markets
Referenced Symbols: EFX ,



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