* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Sept 6 (Reuters) - The dollar edged lower on Friday
and was heading for its biggest weekly drop in a month as
expectations grew that the Federal Reserve would cut U.S.
interest rates this month.
Traders bought the Australian dollar and other risky assets
this week after the U.S. reported strong economic data and
political tension eased, especially in the United Kingdom, where
lawmakers moved to block Prime Minister Boris Johnson's efforts
to leave the European Union without a transition agreement.
A dollar index .DXY slipped 0.1% lower to 98.32 and was
down 0.54% so far this week, its biggest weekly drop since early
August.
"The latest risk rally rests on a number of pillars like the
recent upbeat U.S. data, receding political risks in the UK and
hopes for an abatement of the US-China trade tensions," said
Valentin Marinov, head of G-10 FX research and strategy at
Credit Agricole in London.
Surveys suggested the U.S. economy was in better shape than
investors had feared. Services activity accelerated in August
and private employers increased hiring more than expected.
A U.S. non-farm payrolls report due later on Friday was
expected to show 158,000 jobs were added and the unemployment
rate remained unchanged at 3.7% in August.
Despite the upbeat data, bond markets expect the Fed to cut
interest rates this month. A total of 55 basis points of rate
cuts are expected this year.
A combination of likely dovish central banks and decent
economic data also encouraged investors to buy the Canadian
dollar CAD=D3 and the Swedish crown SEK=D3 against the U.S.
dollar.
China's yuan CNH= was mostly flat, though on track for its
first weekly gain in three weeks.
"Investors are now hoping they can take this week's
positivity over the finishing line, so fingers crossed the
August U.S. payroll report ... doesn't throw a damp towel on the
proceedings," said Stephen Innes, Asia Pacific market strategist
at AxiTrader.
The optimism of the past few days bolstered the South Korean
won KRW= and the Australian and New Zealand dollars AUD=D3
NZD=D3 , setting them on course for their best weekly gains
since June, each adding more than a percentage point against the
U.S. dollar.
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REER valuations https://tmsnrt.rs/2PZZYM2
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