* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, Aug 19 (Reuters) - The euro steadied on Monday after
suffering its biggest weekly drop in nearly two months as risk
appetite gradually returned to global markets after a week of
turmoil.
With hopes of fiscal stimulus from Germany growing and steps
by China over the weekend to cut corporate lending costs pushing
up equities, growth-sensitive currencies such as the Australian
dollar also edged higher. and However, investor optimism is likely to be capped before a
speech by U.S. Federal Reserve Chairman Jerome Powell later this
week at the Jackson Hole central bank 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 and stressing that the
committee's bias is now back in accommodation mode," 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.
Against the greenback EUR=EBS , the euro was broadly flat
at $1.1094 in early London trading after falling 1% last week,
its biggest weekly drop since early July.
The dollar index .DXY , which measures the greenback
against six major currencies, was marginally higher in Asia at
98.201, close to a two-week high of 98.339 reached on Friday.
Global markets went into a tailspin last week after bond
yield curves inverted signaling the global economy was headed
towards a recession, sending panicky investors to the relative
safety of perceived safe-haven assets such as gold and yen.
Latest weekly positioning data showed hedge funds ramped up
their holdings of the Japanese currency for a second consecutive
week versus the greenback.
Against the yen JPY=EBS , the dollar was little changed at
106.37 yen, near a one-week high of 106.98 yen.