FOREX-Dollar slips on softer U.S. yields; Aussie shines

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, July 18 (Reuters) - The dollar broadly edged lower
against its rivals on Thursday after softer U.S. Treasury yields
in the wake of weak U.S. housing data sapped demand as investors
focused their attention on a Fed meeting next week.
While expectations of a 25 basis point rate cut are baked
into money markets, some investors are gunning for a 50 basis
point cut. The Fed is widely expected to cut a total of 75 basis
points by the end of the year.
Morgan Stanley strategists said in a daily note that the
overall outlook for riskier assets remained bearish thanks to
disappointing U.S. earnings reports and weak prospects for
global trade.
"All this gives strong reason for the current
internationally-focused Fed to consider cutting rates by 50 bps
at the end of the month," they said. A 50 basis point cut would
weaken the dollar sharply, particularly against high-yielding
currencies, they said.
Against a basket of its rivals .DXY , the dollar edged 0.1%
lower to 97.09.
The weakness in the dollar pushed other currencies higher.
The Australian dollar led gainers thanks to a solid jobs report.
Australian employment rose by a surprisingly small 500
positions in June, but all the weakness was in part-time work
with full-time jobs rising by 21,100. The unemployment rate held
steady at 5.2% for a third month running. The Aussie AUD=D4 was 0.3% higher at $0.7031.
"The Australian dollar drew a significant part of its
support from the June underemployment rate, which fell to 8.2%
from 8.6%," said Masafumi Yamamoto, chief forex strategist at
Mizuho Securities in Tokyo.
He said the underemployment rate had a higher correlation
with policy rates and wages than the jobless rate and was likely
to attract more attention in the future.
The euro EUR= added to modest overnight gains and edged up
0.1% to $1.1238. Its gains were restrained by expectations of
easing from the European Central Bank as early as next week.