* Investors await speech by Fed's Powell on Wednesday
* Some markets pricing in negative U.S. interest rates
* U.S. CPI falls 0.8% in April
* Concerns grow about coronavirus re-infections
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Recasts, adds new comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, May 12 (Reuters) - The dollar fell on Tuesday as the mood turned cautious a day ahead of
Federal Reserve Chairman Jerome Powell's speech on economic issues and as investors weighed the chances of
negative U.S. interest rates.
The dollar was not necessarily being driven by safe-haven factors, analysts said, given that U.S.
stocks were down and Treasury prices were higher on the day.
"The dollar is still trading within broad ranges and its weakness today could be due to caution ahead
of Powell's speech tomorrow and especially given the current talk about negative interest rates," said Joe
Manimbo, senior market analyst at Western Union Business Solutions in Washington.
Although Powell and Fed officials have all but ruled out cutting interest rates below zero, several
markets have started to price in such a cut. Fed funds futures on Tuesday priced in negative
interest rates of about half a basis point in April 2021. 0#FF:
The rate options market implied a 23% probability that the key federal funds rate will fall below zero
by end-December, BofA Securities data showed, citing short expiry options on one-year U.S. swap rates.
That compares with a 9%-10% probability last week.
In afternoon trading, the dollar index was down 0.3% at 99.959 =USD .
The dollar edged lower after data showed U.S. consumer prices dropped 0.8% in April, the largest
decline since December 2008 when the economy was in the throes of a recession and marking the second
straight monthly decrease in the CPI. Overall, analysts said risk-taking has been limited by persistent concerns about the global health
crisis.
New cases of coronavirus infections have been found in China, South Korea and Germany, where
respective governments have eased lockdown restrictions. A re-emergence of coronavirus cases
could dent a global economic recovery on the back of an injection of monetary and fiscal stimulus.
The euro was last up 0.4% against the U.S. currency at $1.0848 EUR=EBS , though not far from the
$1.0636 low touched at the end of March when the pandemic sent markets into turmoil.
The dollar fell 0.5% against the yen to 107.19 JPY=EBS .
The Australian dollar AUD=D3 fell earlier, dipping to a five-day low of US$0.6432 after China banned
some Australian meat imports. It later trimmed losses as Australia's trade minister played down the issue
as a technicality, and was last down 0.2.% at US$0.6477. Currency bid prices at 4:19PM (2019 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.0847 $1.0806 +0.38% -3.24% +1.0884 +1.0785
Dollar/Yen JPY= 107.1600 107.6600 -0.46% -1.56% +107.6900 +107.1700
Euro/Yen EURJPY= 116.26 116.33 -0.06% -4.67% +116.8300 +115.9600
Dollar/Swiss CHF= 0.9697 0.9729 -0.33% +0.20% +0.9750 +0.9667
Sterling/Dollar GBP= 1.2276 1.2335 -0.48% -7.41% +1.2375 +1.2268
Dollar/Canadian CAD= 1.4056 1.4006 +0.36% +8.24% +1.4064 +1.3972
Australian/Doll AUD= 0.6475 0.6488 -0.20% -7.78% +0.6536 +0.6433
ar
Euro/Swiss EURCHF= 1.0519 1.0516 +0.03% -3.07% +1.0522 +1.0515
Euro/Sterling EURGBP= 0.8835 0.8759 +0.87% +4.51% +0.8844 +0.8758
NZ NZD= 0.6078 0.6079 -0.02% -9.77% +0.6122 +0.6043
Dollar/Dollar
Dollar/Norway NOK= 10.1540 10.2852 -1.28% +15.67% +10.3627 +10.0950
Euro/Norway EURNOK= 11.0150 11.1344 -1.07% +11.97% +11.1855 +10.9559
Dollar/Sweden SEK= 9.7692 9.8729 -0.70% +4.51% +9.9126 +9.7109
Euro/Sweden EURSEK= 10.5980 10.6732 -0.70% +1.23% +10.7100 +10.5606
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Euro steady vs dollar but close to March low https://tmsnrt.rs/2WpJ9uM
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