FOREX-Dollar firm on upbeat U.S. data; pound and euro on the back foot

* Strong US data curbs expectations of deep Fed rate cut
* Pound hovers near 27-month lows on Brexit woes
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, July 17 (Reuters) - The dollar stood firm on
Wednesday after upbeat U.S. data further tempered expectations
of aggressive policy easing by the Federal Reserve later this
month.
The struggling pound and euro also provided additional
impetus to the U.S. currency.
The dollar index .DXY against a basket of six major
currencies was effectively unchanged at 97.365 after gaining
0.5% the previous day.
The dollar rose after stronger-than-expected June U.S.
retail sales data dampened expectations that the Fed could cut
interest rates by 50 basis points (bps) rather than 25 bps at
its month-end policy review.
"The strong U.S. data is a key driver behind the dollar's
latest gains, but weakness in European currencies, notably the
pound and euro, is also playing a significant role as well,"
said Junichi Ishikawa, senior FX strategist at IG Securities.
The pound GBP=D4 retreated to a 27-month low of $1.2396
overnight as Boris Johnson and Jeremy Hunt, the two candidates
to be Britain's next prime minister, vied to outgun each other
on taking a harder Brexit stance. GBP/
Sterling last traded little changed at $1.2411.
The euro EUR= was steady at $1.1212 after losing more than
0.4% the previous day.
The losses came after a survey by the ZEW institute showed
that the mood among German investors deteriorated more sharply
than expected in July amid the prolonged trade dispute between
China and the United States as well as political tensions with
Iran. The dollar was a touch lower at 108.175 yen JPY= after
advancing 0.3% against the yen overnight on the strong U.S.
retail sales data.
The Australian dollar AUD=D4 was nearly flat at $0.7007,
having lost 0.4% on Tuesday following comments by U.S. President
Donald Trump.
The United States still has a long way to go to conclude a
trade deal with China but could impose tariffs on an additional
$325 billion worth of Chinese goods if it needed to do so, Trump
said. The Aussie is sensitive to the economic fortunes of China,
Australia's largest trading partner.
The impact of Trump's comments on other major currencies,
however, was limited.
"The U.S.-China trade row is not at the centre of the
market's attention right now. Focus is on the Fed's policy, U.S.
data and their impact on yields," Ishikawa at IG Securities
said.
Fed Chairman Jerome Powell, speaking in Paris on Tuesday,
reiterated a pledge to "act as appropriate" to keep the U.S.
economy humming. Chicago Fed President Charles Evans, meanwhile, said on
Tuesday that an interest rate cut of a half a percentage point
at the U.S. central bank's July 30-31 policy meeting could speed
up achieving the Fed's inflation goal. "A Fed rate cut has become a foregone conclusion. But there
appears to be no consensus --not only in the markets but within
the Fed itself-- on how many times rates would be lowered and
the direction of the U.S. economy," said Makoto Noji, chief
currency and foreign bond strategist at SMBC Nikko Securities.