Dollar near the peak of two months after US GDP, the pound reaches its lowest level in 28 months

By Hideyuki Sano

TOKYO (Reuters) – The dollar held on Monday at a two-month high against a basket of Asian currencies, after better than expected performances in the United States. GDP Last week's data boosted its performance against rival currencies.

The US Federal Reserve is set to lower interest rates for the first time in more than a decade this week, but this is generally seen as a precautionary measure to protect the economy from uncertainties and trade pressures. countries facing more imminent risks.

"What everybody is interested in right now is whether the United States will enter a full rate reduction cycle. the GDP The numbers were a little stronger than expected, which had a negative impact on the prospect of a long cycle of easing in the US, "said Kyosuke Suzuki, FX Director at Societe Generale. .

The dollar index <=USD> at 97.919 after hitting a two-month high at 98.093 on Friday.

US gross domestic product grew 2.1% annualized in the second quarter, up from 1.8% below expectations, as rising consumer spending partially offset the effects of lower exports and lower exports. building smaller stocks.

"The dollar has been supported recently by strong US economic data. Eurozone data has been weak recently. As a result, if US data such as the payroll were strong, the dollar could win despite a Fed rate cut, "said Shinichiro Kadota, senior strategist at Barclays.

The data pushed US bond yields higher and reinforced expectations that the Fed is considering a lower interest rate cut of 25 basis points instead of 50 basis points to 2.0-2.25 %.

Although US money market futures reach 1.5 to 1.75% overall close to 75 basis points before the end of the year, it remains the dollar with the highest interest rates among the main currencies.

The European Central Bank said last week that it was likely to further reduce interest rates and adopt more easing measures in September to support the downturn in the economy of the economy. eurozone.

The euro amounts to $ 1,111315 <EUR= EBS>, almost flat in Asia and not far from the trough of $ 1.1101 hit Thursday, a trough since May 2017.

White House economic adviser Larry Kudlow has also revived the US currency, saying Friday that the Trump government had "ruled out" to intervene in the markets to bring down the value of the US dollar.

Against the yen, the dollar slipped 0.2% to 108.47 yen <JPY= EBS>, largely due to end-of-month sales by Japanese exporters after hitting a two-week high of 108.83 yen on Friday.

The Bank of Japan begins a political meeting two days later Monday.

Market players expect the BOJ to send dovish messages and he might try to give some semblance of easing by altering his directions.

But the central bank seems certain to refrain from rate cuts and other major policy easing measures given its lack of ammunition.

The Australian dollar remained stable at $ 0.6913 <AUD= D4> after falling to 0.6900 USD lower for a month following Chinese data released on Saturday by China, showing the profits made by the country's industrial enterprises which declined in June.

US Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer will meet with Chinese Vice Premier Liu He for talks in Shanghai, their first face-to-face meeting since US President Donald Trump Chinese President Xi Jinping agreed to resume the talks late month.

But Friday, Trump presented a pessimistic view on the conclusion of a trade deal with China, saying that Beijing could not sign one before the elections of November 2020 in the hope that the Democrat, which will be easier to negotiate, the go ahead.

The pound fell to its lowest level in 28 months, while the new British Prime Minister Boris Johnson seems more and more conducive to a Brexit.

Senior ministers said on Sunday that the British government was working on the badumption that the EU would not renegotiate its agreement on Brexit and speed up preparations to leave the bloc on October 31 without agreement.

An opinion poll also showed that the conservative Johnson party had opened a 10-point lead over the Labor opposition party, fueling speculation that Johnson was going to call early elections.

The pound fell 0.17% to $ 1.2363 <GBP= D4>, a level last touched in March 2017.

(Edited by Jacqueline Wong & KIm Coghill)