* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Markets waiting for Powell's speech at Jackson Hole
* Fed reluctant to embark on easing cycle - Fed minutes
* Futures show rate cut expectations remain high
* Brexit confusion undermines sterling
(Adds new low for Chinese yuan)
By Stanley White
TOKYO, Aug 22 (Reuters) - China's yuan fell to an 11-year
low against the dollar on Thursday due to worries about an
economic slowdown, prompting Chinese state-owned banks to
support the currency in the forwards market.
The yuan's fall, combined with declines in Hong Kong stocks
on concerns about protests in the city, pushed the antipodean
dollars lower and boosted the yen against major crosses in
so-called risk-off trades.
Other currencies were locked in tight ranges ahead of U.S.
Federal Reserve Chairman Jerome Powell's speech at Jackson Hole
on Friday, which will be closely scrutinised after an inversion
in the Treasury yield curve highlighted the risk of a U.S.
recession.
Expectations for additional rate cuts are high, and U.S.
President Donald Trump's vocal calls for aggressive monetary
easing could put the Fed in a bind.
"Some investors like commodity trading advisors have linked
the downward move in the yuan and Chinese stocks to selling
cross yen," said Yukio Ishizuki, foreign exchange strategist at
Daiwa Securities in Tokyo.
"The bigger concern is what Powell says tomorrow. He doesn't
want to give away too much, but there is already a sense that
Trump is doing a lot to decide monetary policy."
At the Fed's last meeting in July, the U.S. central bank cut
interest rates for the first time in a decade to 2.00-2.25%. The
Fed next meets Sept. 17-18.
In onshore trading, the yuan CNY=CFXS fell to 7.0752 per
dollar, its weakest since March 2008, before recovering slightly
to 7.0732. In offshore trade the dollar CNH= rose 0.29% to
7.0872 yuan.
Major Chinese state-owned banks were seen supporting the
yuan by receiving dollar/yuan swaps, traders told Reuters.
The International Monetary Fund on Wednesday warned
governments against trying to weaken their currencies through
monetary easing or market intervention. This could place unwanted attention on the yuan after the
U.S. Treasury declared China a currency manipulator in an
escalation of the U.S.-China trade war.
China is also in the spotlight as a series of protests in
Hong Kong calling for greater democratic freedoms have become
the biggest challenge to Chinese rule of the city since it
reverted from British colonial rule in 1997.
The dollar held steady at 106.43 yen JPY=EBS following a
0.36% gain on Wednesday, its biggest since Aug. 13.
Against the Swiss franc CHF=EBS , the dollar traded at
0.9828, close to a two-week high of 0.9831.
The Australian dollar AUD=D3 fell 0.32% to $0.6761 and
declined 0.47% to 71.95 yen AUDJPY= .
The New Zealand dollar NZD= skidded to $0.6372, the lowest
since January 2016, and slumped 0.66% to 67.84 yen NZDJPY= .
Minutes from the Fed's last meeting released on Wednesday
showed policymakers were deeply divided over whether to cut
interest rates but were united in wanting to signal they were
not on a preset path to more cuts. Benchmark 10-year Treasury yields US10YT=RJR gained after
the minutes, but interest rate futures are pricing in a 100%
probability of a Fed rate cut at its September meeting, a 75%
chance of an additional cut in October, and a 48% likelihood of
another cut in December, the CME's FedWatch tool shows.
The Fed and other central banks are cutting interest rates
to contain a global economic slowdown caused by a prolonged
trade war between the United States and China.
"Yields are supportive of the dollar for now, but this may
not last after Powell's speech," said Junichi Ishikawa, senior
foreign exchange strategist at IG Securities in Tokyo.
"Additional rate cuts are thoroughly priced in. If Powell
sounds slightly hawkish, stocks could sell off, which would hurt
the dollar against safe-haven currencies like the yen."
Sterling traded a tad lower at 91.46 pence per euro
EURGBP= , on course for its second day of losses, as
uncertainty about Britain's divorce from the European Union
weighed on the pound.
Against the greenback, sterling GBP=D3 was little changed
at $1.2127.
French President Emmanuel Macron said on Wednesday there
would be no renegotiation of the terms for Britain's exit from
the EU. British Prime Minister Boris Johnson is due to meet
Macron in Paris on Thursday.