FOREX-Dollar, euro trade cautiously ahead of key Fed speech

* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
* Traders expect dovish tone from Fed's Powell
* U.S. durable goods orders seen slowing in July
* Yuan rises toward seven-month high on trade deal relief

By Julien Ponthus
LONDON, Aug 26 (Reuters) - The dollar and the euro traded
cautiously on Wednesday as investors refrained from taking risky
bets a day ahead of a key speech by Federal Reserve Chairman
Jerome Powell.
Amid growing speculation Powell could unveil a softer policy
stance towards inflation at the annual Jackson Hole retreat on
Thursday, investors are bracing for the Fed's possible new steps
to prop up the U.S. economy.
"Either the Chairman drops something juicy for
"reflationistas" (aka USD bears) or the USD rips higher for a
few weeks", Stephen Innes, chief global markets strategist at
AxiCorp, wrote in a morning note.
"I would never bet against the Fed sounding dovish during an
easing cycle", he added.
The dollar index, which tracks the greenback's value against
a basket of currencies =USD was up 0.16% at 93.11 after taking
a hit on Tuesday following data showing U.S. consumer confidence
tumbling to the lowest in more than six years.
Data later on Wednesday is forecast to show growth in U.S.
durable goods orders slowed in July, highlighting policymakers'
concerns about the economy.
"A softer-than-expected figure should revive the Fed doves,
while a better-than-expected read would improve the investor
mood, but should not have a material impact on dovish Fed
expectations as it is clear to everyone that the economy needs
sustained support for posting good results," Ipek Ozkardeskaya,
a senior analyst at Swissquote Bank, told her clients.
Against the euro EUR=D3 , the dollar stood at $1.1818
following a 0.4% decline in the previous session.
The yuan rose toward a seven-month high at $6.8969 after
U.S. and Chinese trade officials reaffirmed their commitment to
a Phase 1 trade deal, which eased concerns about a diplomatic
standoff between the world's two-largest economies.
The British pound GBP=D3 bought $1.3141 having risen 0.7%
against the dollar on Tuesday.
Sterling has managed to shrug off a lack of progress in
trade negotiations between Britain and the European Union.
The dollar was locked into a narrow range against the yen,
last trading at $106.32 JPY=EBS .
The Australian dollar AUD=D3 was little changed at $0.7198
as traders monitored a coronavirus flare-up in the state of
Victoria.