FOREX-Dollar slips on global growth, trade war worries


* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Dollar marginally lower versus its peers in early Asiantrade

* Aussie, kiwi dollar edge higher versus greenback

By Vatsal Srivastava

SINGAPORE, Jan 24 (Reuters) - The dollar eased against itspeers on Thursday, as concerns over global growth, a U.S.government shutdown and U.S.-Sino trade talks kept a tight lidon the greenback.

"Trade tensions are the most dominant factor for investorsentiment right now and will drive market flows," said NickTwidale, chief operating officer at Rakuten Securities.

"The U.S. shutdown has lasted for too long now and marketswill like to see an end of it."

Twidale added that commodity currencies such as theAustralian dollar can move higher once these issues are resolvedand sentiment improves.

The Aussie dollar AUD= was 0.2 percent higher at $0.7156supported by solid jobs data while kiwi dollar NZD= gained 0.1percent to $0.6793. urn:newsml:reuters.com:*:nS9N1Y802B

The partial U.S. government shutdown, now in its 34th dayhas hurt investor sentiment. U.S. Republican Senate MajorityLeader Mitch McConnell said he planned to hold a vote onThursday on a Democratic proposal that would fund the governmentfor three weeks. urn:newsml:reuters.com:*:nL1N1ZN01L

Global growth concerns have also rattled investor appetitefor risk. On Monday, the International Monetary Fund (IMF) cutits 2019 and 2020 global growth forecasts, citing abigger-than-expected slowdown in China and the eurozone, andsaid failure to resolve trade tensions could further destabilisea slowing global economy.

In Asian trading, the yen JPY= was marginally higher at109.54, after weakening 0.2 percent versus the greenback in theprevious session.

On Wednesday, the Bank of Japan kept its policy unchanged.The BOJ cut its inflation forecasts and warned of growing risksto the economy from trade protectionism and slowing globaldemand. urn:newsml:reuters.com:*:nL3N1ZM2OK

The dollar index .DXY , a gauge of its value versus sixmajor peers was marginally lower at 96.10.

Markets are bearish on the outlook for the dollar this year.Traders in interest rate futures are wagering that the FederalReserve will stand pat on rates in 2019 in the face of growthrisks both at home and globally.

All eyes will be on the euro EUR= as investors await theEuropean Central Bank's monetary policy announcement later onThursday where it is all but certain to keep policy unchanged.

The single currency was marginally higher at $1.1383. Theeuro has lost around 1.6 percent of its value over the last twoweeks as traders expect the ECB to remain dovish and keepmonetary policy accommodative for an extended period of time.Low inflation as well as weaker-than-expected economic activityin Germany and France, however, may lead ECB President MarioDraghi to point towards a potentially longer lastingslowdown. urn:newsml:reuters.com:*:nL3N1ZN3AL

"If the central bank lowers its growth or inflationforecasts and Draghi focuses on weaker growth, we could seeEUR/USD fall to $1.12 easily," said Kathy Lien, managingdirector of currency strategy at BK Asset Management.

Elsewhere, sterling traded marginally higher at $1.3075,hovering near highs last seen in mid-November in a sign tradersexpect Britain to avoid a chaotic exit from the European Union.

Since Prime Minister Theresa May's divorce deal with the EUwas rejected by lawmakers last week in the biggest defeat inmodern British history, lawmakers have been trying to plot acourse out of the crisis, yet no option has the majority supportof parliament.

"FX markets are becoming more convinced that the worse thatmight happen on Brexit is that Theresa May's previously doomedWithdrawal Agreement might actually get over the line if the'hard Brexiteers' in her government become convinced that thealternative is an extension of the Article 50 timeline, a secondreferendum and potentially no Brexit," said Ray Attrill, head ofcurrency strategy at NAB in a note. (Editing by Jacqueline Wong) ((vatsal.srivastava@thomsonreuters.com; +65 68703571; ReutersMessaging: vatsal.srivastava.thomsonreuters.com@reuters.net))




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