FOREX-Dollar on course for weekly loss as Fed joins rate cut camp

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar limps to weekly loss on dovish Fed
* Treasury yield tumble, gold surge spooks dollar bulls
* Focus shifts to G20 and US-China trade row

By Stanley White
TOKYO, June 21 (Reuters) - The dollar struggled to get on
the front foot on Friday, and was poised for a weekly loss
against major currencies after the U.S. Federal Reserve joined
global peers with plans to cut interest rates to support
flagging economic growth.
A decline in benchmark 10-year Treasury yields below 2% and
a rise in gold above heavy technical resistance to a near
six-year high suggested the dollar could face a period of
prolonged selling pressure, traders and analysts say.
The focus now shifts to whether the United States and China
can resolve their trade row at a Group of 20 leaders summit in
Osaka next week, but analysts caution that chances of a decisive
breakthrough are low.
"The dollar's upside is capped, because we are already
looking past the Fed's July meeting for more rate cuts," said
Junichi Ishikawa, senior foreign exchange strategist at IG
Securities.
"Central banks are in a competition to ease policy, so it's
a question of which currency to sell. There are some hopes
surrounding G20, but we've been here before only to be
disappointed."
Money markets are pricing in three Fed rate cuts before
year-end, starting with the next meeting in July, and are
tipping as many as five cuts through mid-2020. FEDWATCH
The dollar traded at 107.30 yen JPY= , slightly above a
five-month low of 107.20 yen reached Thursday after Fed Chairman
Jerome Powell signalled a rate cut at the next policy meeting in
July.
Powell's rate tilt joined the Fed with global peers such as
the European Central Bank and the Reserve Bank of Australia this
week on a path toward more policy stimulus to maintain economic
growth.
Some hedge funds were surprised by the Fed's dovish stance,
leading to an unwinding of dollar-long positions built up before
its meeting on Wednesday, analysts said.
For the week the dollar was down 1.2% versus the yen, on
course for the biggest decline since late March.
The dollar index .DXY , which measures the U.S. currency
against six of its peers, was at 96.615, down 1.0% on the week.
China has confirmed that President Xi Jinping and U.S.
President Donald Trump will meet on the sidelines of G20 next
weekend. The two countries have raised tariffs on each other's goods
in a dispute about China's trading practices, hitting global
trade and growth. Talks broke down last month, and some traders
say chances for a truce next week are low.
Sterling changed hands at $1.2707, on course for a 1.0%
weekly gain, which would be its best performance in seven weeks.
The Bank of England on Thursday struck a less dovish tone
than other central banks as they voted unanimously to keep
interest rates on hold at 0.75% and stuck to their message that
rates would need to rise, so long as Britain avoids a damaging
no-deal exit from the European Union.
The euro traded at $1.1296, little changed on the day but up
0.8% for the week.
Benchmark 10-year Treasury yields were at 2.0129% after
tumbling to 1.9740%, the lowest since November 2016. Lower
Treasury yields reduce the appeal of investing in the dollar.

(Editing by Shri Navaratnam)