* China unveils interest rate reform, boosts risk appetite
* Focus on Fed's Jackson Hole symposium
* Markets expect monetary leaders to announce key measures
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Recasts, updates prices, adds comment, changes byline, dateline; previous LONDON)
By Gertrude Chavez-Dreyfuss
NEW YORK, Aug 19 (Reuters) - The safe-haven yen and Swiss franc retreated against the dollar on
Monday, as risk sentiment gradually improved after a week of turmoil on hopes that major central banks
would look to launch fresh stimulus measures to lift their sluggish economies.
The Japanese currency fell for a third straight session versus the greenback, while the Swiss unit
slid to a two-week low against the dollar.
Optimism about government action to avert recession concerns in the United States, which was triggered
by last week's inversion in the U.S. bond yield curve, rose in advance of the U.S. Federal Reserve's
symposium in Jackson Hole, Wyoming, toward the end of the week, where central bankers could announce key
measures.
China also unveiled interest rate reforms expected to lower corporate borrowing costs, which helped
lift the market's mood, while the prospect of Germany's coalition government ditching its balanced budget
rule to take on new debt and launch stimulus steps also boosted risk appetite. "We think the more accommodative central bank backdrop should help insulate the downside in risk
markets," said Mazen Issa, senior FX strategist at TD Securities in New York.
"With markets fixated on the (Jackson Hole) symposium later this week and little data to deter focus,
we are biased to see an extension of (last) Friday's relief rally in risk extend in the coming days,
barring another Trump Tweet-bomb," he added, referring to U.S. President Donald Trump's penchant for
announcing policy or making market-moving comments on Twitter.
In morning trading, the dollar rose 0.1% against the yen to 106.51 yen JPY= , helping push the dollar
index trade higher on the day to 98.239 .DXY .
The euro was up versus the greenback at $1.1101 EUR= , after falling 1% last week, its biggest weekly
drop since early July.
Against the Swiss franc, the dollar climbed 0.2% to 0.9801 franc CHF= . Sight deposits at the Swiss
National Bank posted another big weekly rise, indicating more intervention from policymakers. EYED
Investor optimism is also likely to be capped before a speech by Fed Chairman Jerome Powell later this
week at the Jackson Hole conference.
Market strategists believe his comments will be aimed at reassuring nervous markets that the Fed will
remain in an easing stance and set the stage for more rate cuts after a quarter-percentage-point rate cut
in July.
"Powell's speech will set the stage for, at the minimum, a 25 basis-points-rate cut at the September
meeting, stressing that quantitative tightening is over," said Elsa Lignos, global head of FX strategy at
RBC Capital Markets.
Money markets are pricing in a cumulative 67 basis points of rate cuts from the Fed by the end of the
year.
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Currency bid prices at 10:23 AM (1423 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1099 $1.1089 +0.09% -3.21% +1.1113 +1.1088
Dollar/Yen JPY= 106.4900 106.3600 +0.12% -3.43% +106.6900 +106.2500
Euro/Yen EURJPY= 118.22 117.96 +0.22% -6.34% +118.4700 +117.8700
Dollar/Swiss CHF= 0.9799 0.9782 +0.17% -0.15% +0.9820 +0.9774
Sterling/Dollar GBP= 1.2117 1.2149 -0.26% -5.02% +1.2172 +1.2105
Dollar/Canadian CAD= 1.3285 1.3270 +0.11% -2.58% +1.3286 +1.3252
Australian/Doll AUD= 0.6776 0.6780 -0.06% -3.87% +0.6799 +0.6768
Euro/Swiss EURCHF= 1.0880 1.0848 +0.29% -3.31% +1.0898 +1.0850
Euro/Sterling EURGBP= 0.9158 0.9129 +0.32% +1.94% +0.9169 +0.9113
NZ NZD= 0.6417 0.6427 -0.16% -4.47% +0.6443 +0.6410
Dollar/Dollar
Dollar/Norway NOK= 8.9703 9.0110 -0.45% +3.84% +9.0163 +8.9606
Euro/Norway EURNOK= 9.9586 9.9933 -0.35% +0.53% +10.0007 +9.9440
Dollar/Sweden SEK= 9.6600 9.6560 +0.09% +7.77% +9.6807 +9.6466
Euro/Sweden EURSEK= 10.7225 10.7124 +0.09% +4.47% +10.7464 +10.7089
Swiss central bank intervention and EURCHF https://tmsnrt.rs/2Z1lLXq
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