FOREX-Dollar handicapped by expectations a Fed rate cut is coming

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar finds few buyers as yields fall
* Traders expect U.S. Fed to cut rates at end-July
* Major central banks seen moving toward rate cuts

(Adds analyst's quote, details on Trump)
By Stanley White
TOKYO, July 4 (Reuters) - The dollar was on the back foot on
Thursday, trading near a one-week low versus the yen as falling
Treasury yields boosted expectations the U.S. Federal Reserve
will cut interest rates this month for the first time in a
decade.
Government bonds are in the middle of a global rally, which
has pushed U.S. Treasury yields to the lowest in more than 2-1/2
years and sent European rates to record lows on increasing bets
major central banks will ease policy to bolster the global
economy.
Waning expectations for a quick resolution to the United
States-China trade war also hurt sentiment for the dollar.
The focus now shifts to U.S. non-farm payrolls data due on
Friday, which economists expect to have risen by 160,000 in
June, compared with 75,000 in May.
Positive payroll data is unlikely to buoy the dollar as
expectations for U.S. rate cuts are strong, given low inflation
and the fallout from the tariffs the United States and China
have already imposed on each other's goods.
"Everyone from the Reserve Bank of Australia to the Fed is
talking about inflation disappointing to the downside," said
Mayank Mishra, macro strategist at Standard Chartered Bank in
Singapore.
"The Fed arguably has more room to ease than anyone else.
That, in theory, should lead to a weaker dollar."
The dollar was little changed at 107.80 yen JPY=EBS on
Thursday, after touching a one-week low of 107.54 yen on
Wednesday.
The greenback has fallen 3.5% versus the yen in the past
three months amid growing signs the Fed will cut rates at its
July 30-31 meeting.
Benchmark 10-year U.S. yields US10YT=RR touched 1.939%,
the lowest since November 2016, before recovering slightly.
Lower yields reduce the appeal of holding the dollar.
The dollar index .DXY against a basket of six major
currencies was slightly lower at 96.734.
Global forex trading likely will be subdued on Thursday as
U.S. financial markets are closed for a public holiday.
U.S. President Donald Trump's administration said on
Wednesday it is scheduling a call with Chinese negotiators next
week that would mark the resumption of talks between the two
countries.
Expectations for a smooth path to resolving the dispute have
waned after Trump said any agreement would have to be tilted
somewhat in favour of the United States.
Adding to a sense of unease about trade talks, Trump late on
Wednesday repeated his view that China and Europe are
manipulating their currencies to pump money into their economies
and said the United States should match these efforts, according
to a tweet. "When U.S. yields are this low, you can't expect people to
pile in and buy the dollar," said Junichi Ishikawa, senior
foreign exchange strategist at IG Securities in Tokyo.
"Sentiment is tilted toward testing the dollar's downside.
There are expectations for lower rates in Europe and Britain, so
it may be easier for the dollar to move versus the yen."
The Australian dollar AUD=D4 stood at $0.6929, having
climbed 0.5% overnight and away from a $0.6956 low touched early
in the week.
The RBA has already cut rates this month to a record low of
1.00% and futures 0#YIB: imply a 92% chance rates will be down
at 0.75% by Christmas, but the Aussie has rebounded due to
expectations that central banks in the United States and Europe
will ease policy even further.
The euro was little changed at $1.1285 EUR=EBS on
Thursday, near a two-week low of $1.1268.
The common currency has weakened since IMF Managing Director
Christine Lagarde, perceived as a policy dove, was nominated as
the next European Central Bank president.
Sterling traded hands at $1.2586 GBP=D4 , mired near a
two-week low of $1.2557 due to speculation the Bank of England
will abandon its preference to raise interest rates and swing to
the dovish camp as the trade war and uncertainty about Britain's
negotiations to leave the European Union impact the outlook.