* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Aug 22 (Reuters) - The euro fell on Thursday,
heading towards a three-week low, as an uptick in euro zone
business growth was offset by another decline in China's
currency.
Euro zone business growth picked up in August, as services
expanded and manufacturing contracted at a slower pace. But
trade war fears knocked future expectations to their weakest in
over six years, a survey showed. "Though the eurozone PMI data was slightly better than
expected, it is fairly gloomy stuff and there is some degree of
concern among investors about the Chinese yuan's decline," said
Neil Mellor, a senior FX strategist at BNY Mellon in London.
The euro EUR=EBS slipped 0.1% to $1.1072, nearing an Aug.
1 low of $1.1027.
Investors also sold Asian currencies after the Chinese yuan
fell to a 11-year low against the dollar, indicating trade
tension between the world's two biggest economies remained a
major issue.
Against the dollar JPY=EBS , the yen advanced by 0.3% to
106.29 yen, nearing last week's eight-month low of 105.05 yen.
The Australian dollar AUD=D3 weakened 0.2% to $0.6768. The
Canadian dollar CAD=D3 slipped 0.1%.
"Some investors like commodity trading advisors have linked
the downward move in the yuan and Chinese stocks to selling
cross yen," said Yukio Ishizuki, foreign exchange strategist at
Daiwa Securities in Tokyo.
In onshore trading, the yuan CNY=CFXS fell to 7.0752 per
dollar, its weakest since March 2008, before recovering to
7.0732. In offshore trade, the dollar CNH=D3 rose 0.29% to
7.0872 yuan.
Major Chinese state-owned banks were seen supporting the
yuan by receiving dollar/yuan swaps, traders told Reuters.
Investors also said the Fed's latest minutes confirmed a
growing view that U.S. policymakers are reluctant to begin a big
rate-cutting cycle in the coming months.
Minutes of the Fed's July meeting showed policymakers were
divided over whether to cut interest rates but united in wanting
to signal they were set on more cuts. The minutes led investors to lower their expectations of big
rate cuts from the Fed next month, but bond markets still expect
rates to be cut by more than 60 basis points by the end of the
year.
Against a basket of six other currencies .DXY , the dollar
was steady at 98.324.
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