* U.S. threatens to slap more tariffs on EU goods
* JP Morgan gauge of manufacturing falls to lowest in 7
years
* RBA cuts rates, turns neutral; Aussie dollar up
* GRAPHIC-World FX rates in 2019: http://tmsnrt.rs/2egbfVh
(Adds comment, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, July 2 (Reuters) - The dollar slipped from
two-week highs on Tuesday, as optimism about U.S.-China trade
negotiations dwindled, even as U.S. President Donald Trump
turned his attention to the European Union with threats of
additional tariffs.
The Australian dollar led all gainers after the Reserve Bank
of Australia cut interest rates, as expected, but signaled a
more balanced outlook.
Trade talks remain a key driver in the currency market, with
investors realizing it may take some time before a deal is
struck and for tariffs to be removed.
"We are basically back where we 'left off' when negotiations
(with China) broke down in May, which was hardly a good spot,"
said Jan Lambregts, head of global economics and markets at
Rabobank in London.
This is not a just a trade spat with China, but a battle for
global leadership between the world's two largest economies, he
noted.
Washington on Tuesday threatened to slap tariffs on $4
billion of additional EU goods, ramping up the pressure on
Europe in a long-running disagreement over aircraft subsidies.
Risky assets overall struggled to gain momentum after
Monday's relief rally, with weak manufacturing surveys pointing
to global economic headwinds.
JPMorgan's gauge of global manufacturing fell to its weakest
in almost seven years, contracting for the second month in a
row, while Morgan Stanley's surveys showed world manufacturing
shrinking for the first time since 2016.
In afternoon trading, the dollar index .DXY fell 0.21% to
96.709, not far above a three-month low of 95.84 hit last week,
as traders priced in aggressive interest rate cuts by the
Federal Reserve this year.
The dollar dropped 0.5% to 107.88 Japanese yen JPY= .
Investors will shift focus to U.S. non-farm payrolls on
Friday, with economists expecting 160,000 new jobs in June,
compared with 75,000 in May.
EURO BOUNCES
The euro got a brief boost after a media report said the
European Central Bank was in no rush to cut rates at a July
policy meeting. The single currency EUR= last traded flat at
$1.1290.
Though central bank officials are divided on the timing of
the next policy move, market gauges of interest rates have
increased the odds of an ECB cut later this month, thanks to a
global drop in bond yields.
In other currencies, the Australian dollar rose 0.3% against
the U.S. dollar to US$0.6986 AUD= after the RBA lowered
interest rates by 25 basis points to a record low of 1.00%,
matching economists' expectations.
It said it would lower rates again "if needed," which
suggested that an additional rate cut was less likely than
previously thought, analysts said.
========================================================
Currency bid prices at 2:50PM (1850 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1289 $1.1285 +0.04% -1.57% +1.1319 +1.1276
Dollar/Yen JPY= 107.8500 108.4300 -0.53% -2.19% +108.4700 +107.7700
Euro/Yen EURJPY= 121.77 122.37 -0.49% -3.53% +122.5200 +121.7800
Dollar/Swiss CHF= 0.9860 0.9874 -0.14% +0.47% +0.9888 +0.9836
Sterling/Dollar GBP= 1.2602 1.2638 -0.28% -1.22% +1.2652 +1.2584
Dollar/Canadian CAD= 1.3104 1.3134 -0.23% -3.93% +1.3138 +1.3096
Australian/Doll AUD= 0.6987 0.6965 +0.32% -0.88% +0.7000 +0.6958
ar
Euro/Swiss EURCHF= 1.1133 1.1144 -0.10% -1.08% +1.1172 +1.1125
Euro/Sterling EURGBP= 0.8957 0.8926 +0.35% -0.31% +0.8972 +0.8921
NZ NZD= 0.6669 0.6669 +0.00% -0.71% +0.6680 +0.6657
Dollar/Dollar
Dollar/Norway NOK= 8.5613 8.5799 -0.22% -0.90% +8.5894 +8.5453
Euro/Norway EURNOK= 9.6645 9.6825 -0.19% -2.44% +9.6918 +9.6625
Dollar/Sweden SEK= 9.3274 9.3598 -0.28% +4.05% +9.3642 +9.3168
Euro/Sweden EURSEK= 10.5325 10.5625 -0.28% +2.62% +10.5745 +10.5282
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GRAPHIC-Euro positions https://tmsnrt.rs/2YvsSDm
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