FOREX-Dollar on back foot over expectations a Fed rate cut is coming

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Dollar finds few buyers as yields fall
* Traders expect U.S. Fed to cut rates at end-July
* Major central banks seen moving toward rate cuts

By Stanley White
TOKYO, July 4 (Reuters) - The dollar was on the back foot on
Thursday, trading near a one-week low versus the yen as falling
Treasury yields fuelled expectations the U.S. Federal Reserve
will cut interest rates this month for the first time in a
decade.
Government bonds are in the middle of a global rally, which
has pushed U.S. Treasury yields to the lowest in more than 2-1/2
years and sent European yields to record lows on increasing bets
major central banks will cut interest rates to bolster the
global economy.
Waning expectations for a quick resolution to the United
States-China trade war also hurt sentiment about the dollar.
The focus now shifts to U.S. non-farm payrolls data due on
Friday, which economists expect to have risen by 160,000 in
June, compared with 75,000 in May.
Positive payroll data is unlikely to buoy the dollar as
expectations for U.S. rate cuts are strong, given low inflation
and the fallout from the tariffs the United States and China
have imposed on each other's goods.
"When U.S. yields are this low, you can't expect people to
pile in and buy the dollar," said Junichi Ishikawa, senior
foreign exchange strategist at IG Securities in Tokyo.
"Sentiment is tilted toward testing the dollar's downside.
There are expectations for lower rates in Europe and Britain, so
it may be easier for the dollar to move versus the yen."
The dollar was little changed at 107.75 yen JPY=EBS on
Thursday, after touching a one-week low of 107.54 yen on
Wednesday.
The greenback has fallen 3.5% versus the yen in the past
three months amid growing signs the Fed will cut rates at its
July 30-31 meeting.
Benchmark 10-year U.S. yields US10YT=RR touched 1.939%,
the lowest since November 2016, before recovering slightly.
Lower yields reduce the appeal of holding the dollar.
The dollar index .DXY against a basket of six major
currencies was slightly lower at 96.712.
Global forex trading likely will be subdued on Thursday as
U.S. financial markets are closed for a public holiday.
U.S. President Donald Trump's administration said on
Wednesday it is scheduling a call with Chinese negotiators next
week that would mark the resumption of talks between the two
countries.
Expectations for a smooth resolution to a dispute have waned
after Trump said any agreement would have to be tilted somewhat
in favour of the United States.
The euro was little changed at $1.1287 EUR=EBS on
Thursday, near a two-week low of $1.1268.
The common currency has weakened since IMF Managing Director
Christine Lagarde, perceived as a policy dove, was nominated as
the next European Central Bank president.
Sterling traded hands at $1.2580 GBP=D4 , mired near a
two-week low of $1.2557 due to speculation the Bank of England
will abandon its preference to raise interest rates and swing to
the dovish camp as the trade war and uncertainty about Britain's
negotiations to leave the European Union impact the outlook.