FOREX-Dollar hobbled by lower U.S. yields, pound sags on dovish BoE

* Dollar index nudged off 2-week highs
* U.S. yields fall as post-G20 optimism ebbs, British yields
slide
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Shinichi Saoshiro
TOKYO, July 3 (Reuters) - The dollar struggled on Wednesday,
having been nudged off two-week highs as fading optimism over
any near-term Sino-U.S. trade deal revived safe-haven demand and
drove U.S. yields down.
U.S. bond yields also tracked a decline in their British
counterparts to 2-1/2-year lows on dovish-sounding comments from
Bank of England Governor Mark Carney, which in turn weighed on
the pound.
The dollar index .DXY against a basket of six major
currencies stood at 96.742 after pulling back from 96.875 scaled
on Tuesday, its highest since June 20.
The pound was steady at $1.2597 GBP=D4 after shedding
0.35% the previous day, when it touched a two-week trough of
$1.2584.
BoE's Carney said on Tuesday that a global trade war and a
no-deal Brexit were growing risks to Britain's economy which
might need more help to cope with a downturn, prompting
investors to increase their bets on central bank easing.
The dollar traded at 107.83 yen JPY= , having been nudged
off a 12-day high of 108.535 scaled at the start of the week.
"The dollar fell below 108.00 yen again in light of BoE
Governor Carney's dovish comments, which helped depress global
bond yields," said Shinichiro Kadota, senior strategist at
Barclays in Tokyo.
"Yields declined as the BoE, up until now, was seen as the
only central bank which was not as dovish as others."
The euro was little changed at $1.1291 EUR= following a
volatile session on Tuesday, when it swung between a low of
$1.1275 and a high of $1.1322.
The common currency had received a lift after a media report
that European Central Bank policymakers are in no rush to cut
interest rates at a July policy meeting. But it later slipped
after IMF managing director Christine Lagarde, perceived as a
policy dove, was nominated as the next ECB president.
The Australian dollar AUD=D4 was flat at $0.6992 after
gaining about 0.4% the previous day. The Aussie had gained after
the Reserve Bank of Australian cut interest rates but offered a
more balanced outlook. The 10-year U.S. Treasury yield US10YT=RR extended an
overnight fall and brushed a fresh 2-1/2-year low of 1.965%.
At the G20 summit in Japan last weekend, Washington and
Beijing agreed to restart trade talks after U.S. President
Donald Trump offered concessions.
But investors were wary about the chances of a resolution to
the year-long trade war between the world's two biggest
economies, especially given the recent breakdown in talks and
Trump's comments that any deal would have to be tilted in U.S.'s
favour. Sentiment was also dented by Washington's threat of tariffs
on $4 billion of additional European Union goods in a
long-running dispute over aircraft subsidies. (Editing by Shri Navaratnam)