FOREX-Dollar weighed by Fed prospects; Swiss franc, gold shine on geopolitics

* Dollar index at 3-month low as market bets on big Fed
easing
* Swiss franc near 9 month high vs dollar, 2-year high vs
euro
* Gold keeps rising, bitcoin holds above $10,000
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Hideyuki Sano
TOKYO, June 25 (Reuters) - The dollar on Tuesday remained
shackled by the prospects of monetary easing by the Federal
Reserve while the safe-haven Swiss franc and gold were supported
by simmering tensions between Washington and Tehran.
The euro hit a three-month high of $1.14065 EUR= in early
Asia trade. It has gained 2.0% from a two-week low of $1.1181
touched a week ago as the dollar has lost steam.
The dollar was on the defensive against the yen at 107.35
yen JPY= , a tad above Friday's five-month low of 107.045.
The U.S. currency's index against a basket of six major
rivals fell to its lowest level in three months to 95.953
=USD , having lost 1.7% over the past week.
Selling in the dollar accelerated after the U.S. Federal
Reserve signalled it would cut interest rates before year-end on
mounting worries about the fallout from tariff wars President
Donald Trump is waging against China and many other trading
partners.
U.S. bond yields dropped on Monday, with money market
derivatives 0#FF: USDOIS= increasing bets on a
50-basis-point rate cut next month. A 25-basis-point cut is
already fully priced in.
Investors looked to whether Trump and Chinese President Xi
Jinping would at least call a truce in their trade war when they
are expected to meet at the G20 summit in Osaka later this week.
Trump considers his meeting with Xi at the G20 summit in
Japan this week an opportunity to "maintain his engagement" and
see where China is on their trade dispute, a senior U.S.
official said on Monday. The dollar's weakness was the most notable against
traditional safe-haven assets, reflecting concerns about
tensions between the United States and Iran.
Trump targeted Iranian Supreme Leader Ayatollah Ali Khamenei
and other top Iranian officials with sanctions on Monday, taking
a dramatic, unprecedented step to increase pressure on Iran.
The dollar traded at 0.9721 franc CHF= , having slipped to
0.9710 on Monday, its lowest since late September.
The Swiss currency strengthened to near two-year highs
against the euro to 1.1079 per euro EURCHF= , within touching
distance of 1.1057 hit on Thursday, its highest since July 2017.
Gold also shot up to $1,425.3 per ounce XAU= , reaching its
highest levels in nearly six years.
Even the price of bitcoin held firm, staying near onea-year
high above $11,000 BTC=BTSP .
"Assets that can be used as an alternative means of
settlement are favoured, as the dollar is being shunned.
Geopolitics and the Fed are two main reasons behind this," said
Ayako Sera, market economist at Sumitomo Mitsui Trust Bank.
Elsewhere, the British pound remains dogged by Brexit
concerns as eurosceptic Boris Johnson is seen as likely to win a
majority of votes from Conservative party members who will
decide the next leader and prime minister.
Johnson reiterated his promise to take Britain out of the
European Union on Oct. 31, with or without a deal. The pound fetched $1.2737 GBP=D4 , capped by resistance
around $1.2760-65.
Against the euro, the pound was on the back foot at 89.475
pence per euro EURGBP= , near five-month lows of 89.74 set a
week ago.

(Editing by Shri Navaratnam)