* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar gains against major currencies
* Weak German data hits euro
* RBA big event risk in Asian trading
By Stanley White
TOKYO, Oct 1 (Reuters) - The U.S. dollar rose to its highest
in more than two years versus a basket of currencies on Tuesday
before data that is forecast to show the U.S. manufacturing
sector returned to growth, which would ease concern about the
impact of the trade war with China.
The euro teetered near its lowest in more than two years
against the greenback before data expected to show European
inflation has remained tepid, suggesting euro zone policy will
remain accommodative for some time.
The Australian dollar edged lower after the Reserve Bank of
Australia (RBA) cut interest rates and expressed concern about
job growth, while the New Zealand dollar hit a new four-year low
as weak business sentiment continued to weigh on the kiwi.
A host of economic data and comments from central bankers
this week will set the tone for major currencies as traders try
to determine how far policymakers will go to bolster growth.
"Economic data can be supportive of the dollar, and the
Federal Reserve's comments are not as dovish as some people
think," said Masafumi Yamamoto, chief currency strategist at
Mizuho Securities in Tokyo.
"An RBA rate cut and the risk of a stagnant European economy
both should be positive for the greenback."
The dollar index .DXY against a basket of six major
currencies rose 0.10% to 99.479, after briefly touching the
highest since May 12, 2017.
The dollar rose 0.17% to 108.26 yen JPY=EBS , close to its
strongest level in almost two weeks.
The yen remained weak after the Bank of Japan's tankan
showed business confidence in the third quarter slid to its
lowest in six years. Trading was subdued in Asian time because China's financial
markets are closed until Monday for public holidays. Financial
markets in Hong Kong were also closed on Tuesday for a holiday.
The Institute for Supply Management's measure of U.S.
manufacturing activity later on Tuesday is forecast to show a
return to expansion in September, but just barely.
In August, U.S. manufacturing activity contracted for the
first time in three years due to the U.S.-China trade war.
Several Fed policymakers are scheduled to speak this week,
but traders said they will focus most on comments from Fed
Chairman Jerome Powell on Friday for hints about the direction
of U.S. monetary policy.
The Fed has cut interest rates twice this year, but there
are signs that it is reluctant to ease policy further because
the jobs market remains strong.
The euro fell 0.09% to $1.0889 EUR=EBS , close to its
lowest since May 12, 2017.
Data due on Tuesday are forecast to show consumer prices in
the euro zone rose an annual 1.0% in September, unchanged from
the previous month and well below the European Central Bank's
target.
Annual inflation in Germany, Europe's largest economy,
slowed to the lowest in almost three years, data on Monday
showed. The ECB unleashed a new round of monetary easing measures on
Sept. 12, but there is growing concern that the central bank is
reaching the limits of what it can achieve and the burden will
fall to eurozone governments to boost fiscal spending.
The Australian dollar briefly rose after the RBA cut its
cash rate to a record low of 0.75%, as expected. However, the
Aussie surrendered those gains to trade down 0.21% at $0.6742
AUD=D3 .
The RBA said forward-looking indicators suggest employment
growth is likely to slow, which could bolster expectations that
it will cut rates again by early next year. The New Zealand dollar fell to a new four-year low of
$0.6238 NZD=D3 . The kiwi has taken a hit as weakening business
confidence bolstered expectations for monetary easing.
Japan big manufacturers' mood worsens - BOJ tankan
inflation slows unexpectedly in September c.bank seen easing policy in Oct, rates seen at
0.5% by early 2020 ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>