* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Daniel Leussink
TOKYO, June 5 (Reuters) - The dollar struggled to bounce off
seven-week lows on Wednesday after U.S. central bank officials
hinted at the possibility of an interest rate cut in the face of
rising risks to trade and global growth.
Federal Reserve Chairman Jerome Powell on Tuesday dropped
his standard reference to the Fed being "patient" in approaching
any rate decision, saying instead the central bank will respond
as "as appropriate" to trade pressure. The dollar index against a basket of six peers barely
budged, moving up 0.03% at 97.105 .DXY , within reach of a
recent low of 96.995 brushed overnight - its lowest since April
18. It has now fallen 1.3% from a more than two-year high of
98.371 touched on May 23.
Masafumi Yamamoto, chief currency strategist at Mizuho
Securities, said major currencies barely reacted to Powell's
comments as investors had already priced in several rate cuts by
the Fed on the back of the shifting global growth outlook.
The Fed chairman's comments came a day after St. Louis
Federal Reserve President James Bullard said in a speech that a
rate cut may be needed "soon." Rate cuts by some central banks in recent weeks could
potentially signal the start of a global monetary easing cycle
to stave off a sharper economic downturn.
"Central banks across the globe are adopting a dovish tone.
It's kind of a preemptive move," said Yamamoto.
"It doesn't necessarily mean that the economy is worsening –
rather the outlook worsened. It's mainly related to the trade
tensions between the U.S. and China and the U.S. and Mexico."
Australia's central bank on Tuesday slashed benchmark cash
rates to a record low of 1.25% and signalled willingness to go
further if worsening outlook persists. Last month, New Zealand's central bank cut its benchmark
interest rate for the first time in two-and-a-half years as it
moved to support a cooling economy and counter global
uncertainties. In South Korea, its central bank last week kept policy
settings unchanged but adopted a more accommodative tone while
India is expected to cut rates at its policy meeting on
Thursday. On Wednesday, the Australian dollar AUD=D4 rose 0.05% to
$0.6994 ahead of the release of first-quarter gross domestic
product data due at 0130 GMT.
The median forecast in a Reuters poll of analysts showed GDP
likely grew 0.5% last quarter while the annual pace was expected
at 1.8%.
The euro EUR= was up 0.05% at $1.1257, extending its gains
to a fourth session.
Against the yen JPY= , the dollar held steady at 108.165
yen per dollar, within striking distance of a near five-month
high of 107.845 - its highest since Jan. 10 - hit during the
previous session.
(Editing by Shri Navaratnam)