* Currencies still driven by tug of war between central banks
* Australian dollar reaches 10-day high after Chinese data
* China's offshore yuan nudges upwards
* Graphic: World FX rates in 2019
(Updates prices, adds context)
By Olga Cotaga
LONDON, July 15 - The euro remained within its recent trading
range against the dollar on Monday, its progress capped by
expectations for a dovish European Central Bank meeting next week and
after investors turned more bearish on the currency.
Foreign exchange markets were quiet on Monday and volatility low
ahead of major central bank policy meetings next week. The Australian
dollar - enjoying a boost from encouraging Chinese economic data - was
the only real mover.
Money markets have priced in an ECB rate cut of 10 basis points in
September and another one in March. The meeting on July 25 may
reinforce those expectations.
Investors expect the Federal Reserve to cut its key rate by 25
basis points at the end of July, followed by another cut in September.
Forecasts for dovish moves by both central banks have kept
euro/dollar stuck in a narrow range for weeks.
The euro was up 0.08% at $1.1281, still within the recent range
of $1.14 to $1.11.
An index that tracks the dollar against a basket of six other
major currencies was flat at 96.761.
Investors are more bearish on the euro, since Treasury yields look
set to remain among the highest in developed markets despite future
Fed rate cuts, analysts say.
However, the euro "should recover somewhat as it looks to me
like the eurozone economy and expectations are bottoming," said
Marshall Gittler, chief strategist at ACLS Global.
Speculators added to their short positions against the euro in the
week to July 9, according to U.S. Commodity Futures Trading Commission
data. Leveraged funds extended their net long dollar positions for the
first time in seven weeks.
Some analysts are surprised the euro is not gaining as the market
prices in Fed easing.
"For the world's most-traded and least-exciting currency
pair, a dovish Fed, a weak-dollar President and a hint of global
economic optimism, 'ought' to mean EUR/USD rallies. If it can't stage
a move back to 1.14 in the next week or two, what on earth could make
it rally?" said Kit Juckes, FX strategist at Societe Generale.
Elsewhere, the Australian dollar reached a 10-day high on
stronger-than-expected economic data from China, which some analysts
saw as signalling that moves to revive spending in the world's
second-biggest economy are working.
China's industrial output rebounded in June from a 17-year low in
May. June retail sales surged 9.8% from a year earlier.
The Chinese economy grew at the slowest rate in nearly 30 years,
though this was expected.
The Aussie gained 0.2% to $0.7037 against the U.S. dollar, its
highest since July 4.
China's offshore yuan was up 0.1% to 6.8742 yuan per dollar
Sterling was lower by 0.1% at $1.2565 and by 0.2% against the
euro to 89.81 pence .
The Swiss franc was up 0.1% at 1.1080 francs per euro, near a
three-week high .
(Reporting by Olga Cotaga, editing by Larry King)