FOREX-Dollar firm as markets wary over rising MidEast tensions, wait for Fed

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

By Saikat Chatterjee
LONDON, Sept 17 (Reuters) - The dollar stood tall against
other major currencies on Tuesday as geopolitical risks
encouraged investors to flock to the relative safe-appeal of the
greenback before a U.S. central bank policy meeting this week,
where a rate cut is widely expected.
Though oil prices pulled back slightly after surging to
four-month highs on Monday, they remained about 15% higher than
Friday's close as markets remain wary over the threat of a
military response to attacks on Saudi Arabian crude oil
facilities. O/R
"The dollar is in demand as risk sentiment remains weak and
it will be difficult for the Fed to overcome already dovish
market expectations," said Manuel Oliveri, an FX strategist at
Credit Agricole in London.
Traders widely expect the Fed will cut interest rates by a
quarter of a percentage point on Wednesday, and one more cut is
largely priced in before the end of 2019. ECILT/US
Against a basket of its rivals .DXY , the greenback edged
up 0.1% to 98.66, heading towards a more than a two-year high of
99.37 earlier this month.
The Australian dollar led losers, falling 0.5% after the
after the Reserve Bank of Australia flagged an easing bias in
meeting minutes. "They no longer talk about an accumulation of evidence in
order to ease again, and highlight risks to the global economy,"
said National Australia Bank Senior FX Strategist Rodrigo
Catril. "It certainly sounds a lot more dovish than before."
The drop in the Aussie also pulled the kiwi lower, with the
New Zealand dollar NZD= weakening 0.4%. against the greenback.
The dollar's gains were also bolstered by an overnight spike
in dollar funding costs.
The overnight rate in the repurchase agreement (repo) market
USONRP=GCMN jumped to 4.10% from 2.29% late on Friday, its
highest levels seen since the start of the year. Analysts
attributed the rise to quarterly federal tax payments and
supplies. MMT/