FOREX-Dollar falls as markets increase bets on more Fed easing


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    * China's yuan rises to May 2019 levels, 
    * Yen on two-week high on dovish Fed bet
    * U.S. policy decision due at 1800 GMT
    * Graphic: World FX rates in 2020

    By Julien Ponthus
    LONDON, Sept 16 (Reuters) - The U.S. dollar fell across the
board on Wednesday as expectations that the U.S. central bank
may hint at more policy action grew, while the Chinese yuan
vaulted to its highest level since May 2019.
    The Fed decision is due at 1800 GMT. Markets are keen to see
the Fed's economic projections, and particularly whether it
spells out where it sees inflation headed and what exactly that
means for interest rates.
    "The Fed may follow up by announcing some new easing steps
in accordance with its new regime though the general market
consensus seems to be that it will adopt a wait and watch
approach," said Lee Hardman, a strategist at MUFG in London.
    Commerzbank foreign exchange analyst Antje Praefcke argued 
that while prudence in trading the dollar was expected to
prevail ahead of the Fed's statement today, investors may change
their minds soon after. 
    Elsewhere, investors were bullish on China with the
prospects for the world's No. 2 economy improving on the back of
strong retail sales and industrial output data. 
    In offshore trade, the Chinese currency  CNH=D3 , which is
on track for four straight months of gains, notched a fresh
16-month high, hitting 6.7614 per dollar. 
    "People are starting to embrace a new theme, which is that
China is managing much, much better than anyone else," said
Davis Hall, head of capital markets in Asia at Indosuez Wealth
    The Japanese yen  JPY=  also made significant gains during
the session and touched a two-week high of 105.20 per dollar. 
    The euro  EUR=  rose 0.18% to $1.1852 and sterling  GBP= 
crept 0.12% higher to $1.2895 amid continuing uncertainty over
its plans to break its Brexit treaty.

 (Reporting by Julien Ponthus; Editing by Saikat Chatterjee and
Hugh Lawson)
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