FOREX-Euro rises as dollar weakens on questions about more Fed rate cuts

* Fed cuts rate by 25 bps, as expected
* Dollar weaker across board as a result
* Chile's backs out as APEC host, hindering U.S.-China deal
* Chinese remnibi rallies nonetheless, tracking risk
appetite
* Euro zone GDP and inflation data due, considered euro
negative
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Olga Cotaga
LONDON, Oct 31 (Reuters) - The euro gained on Thursday as
the dollar weakened after the Federal Reserve on Wednesday cut
interest rates for the third time this year and left open the
question of whether it would cut them further.
The dollar was falling against most currencies, particularly
the Chinese offshore yuan, which rose to an 11-week high.
The Fed lowered its benchmark rate by 25 basis points to a
target range of 1.50% to 1.75%. But it dropped a reference in
its policy statement that it would "act as appropriate" to
sustain economic expansion - language considered a sign of
future cuts. Still, lack of an explicit signal the Fed was done with
easing for now was taken as less hawkish than expected, helping
to drive the dollar down.
"The new, slightly shorter, statement tries to keep their
options open and puts them back into a data-dependent mode, but
circumstances could mean that they have less optionality than
they think," said Tim Foster, portfolio manager at Fidelity
International in London.
The euro was up 0.1% at $1.1161, after earlier reaching a
10-day high of $1.11705 EUR=EBS .
It might fall later, though. Reports later on Thursday are
expected to show the euro zone's gross domestic product growth
slowed and its inflation rate fell in the third quarter.
The flash HICP inflation data was expected to fall to 0.7%
in October from 0.8% in September, according to a Reuters poll.
Preliminary third-quarter GDP growth was forecast at 1.1%
year-on-year, compared with 1.2% in the second quarter.
"European data won't provide many reasons to be cheerful
about the euro," ING analysts said in a note.
The dollar index .DXY rose on Wednesday to its highest
since Oct. 17 as Fed Chairman Jerome Powell spoke about the
central bank's decision. But it slipped 0.4% on Thursday to
97.29, its lowest in a week.
The dollar also fell against the safe-haven Japanese yen
JPY=EBS , by 0.2% to 108.62 yen. It earlier reached a six-day
low of 108.54.
The yen gained after Chile withdrew as host of an APEC
summit in November, where the United States and China had been
expected to take major steps toward ending a 15-month-old trade
war. Traders still think the world's two biggest economies will
arrive at a trade truce. China's Foreign Ministry said on
Thursday Chinese and U.S. heads of state have been maintaining
contact. The Chinese yuan rallied to its highest in 11 weeks against
the dollar. The offshore yuan last traded hands at 7.0345 per
dollar, up 0.1% CNH=EBS .
"Because of this sort of lull in U.S.-China trade war,
you're starting to see investors getting their toes wet in EM
assets," said Stephen Gallo, European head of FX strategy at BMO
Capital Markets. "People are hopeful of a year-end Santa Claus
rally ... they're hopeful we can get a trade deal."
The Chinese currency was tracking the resurgent risk
appetite in emerging markets, instead of leading it, Gallo said.
"I really can't think of a bullish China story for now."