FOREX-Dollar rises to 5-week peak on debt, spending deal

By Richard Leong

* Euro sags below $1.12 to lowest since late May * IMF raises U.S. growth view, lowers global growth outlook * Sterling slips as Johnson succeeds May as UK prime minister * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Updates market action, changes dateline, previous LONDON) By Richard Leong NEW YORK, July 23 (Reuters) - The dollar on Tuesday rose to near a five-week high against a basket of currencies after President Donald Trump and U.S. lawmakers reached a two-year deal that raises the limits on government borrowing to cover spending. The agreement averted another partial government shutdown. A 35-day shutdown between December and January led to a furlough of 800,000 federal workers and cost the economy about $3 billion. As a result of this deal, the U.S. Treasury can ramp its short-term borrowing to rebuild a cash pile that has fallen to about $195 billion from $423 billion in late April, Morgan Stanley analysts said. An increase in U.S. borrowing would pare money in the banking system, which is seen supportive for the greenback. "Excess reserves should decline, lending (dollar) support," Morgan Stanley strategists Hans Redeker, Gek Teng Khoo and Sheena Shah wrote in a research note. The dollar's appeal got a boost after the International Monetary Fund raised its forecast on U.S. growth in 2019 to 2.6% while lowering its overall global growth outlook to 3.2% for this year. At 10:11 a.m. (1411 GMT), an index that tracks the greenback versus the euro, yen, sterling and three other currencies was up 0.39% at 97.638. It touched 97.708, its highest level in about five weeks. The dollar's strength also stemmed from broad weakness in the euro as investors gear up for news of fresh stimulus from the European Central Bank on Thursday. Though money markets have trimmed bets on a 10 basis point deposit rate cut from the ECB to less than 40% from roughly 60% on Friday, analysts expect dovish forward guidance and possibly more generous terms for its planned new multi-year loans. "The market has doubts in the ECB keeping its limited powder dry this week, the driving force behind the euro's leg lower," said Joe Manimbo, senior market analyst at Western Union Business Solutions in Washington. The single currency fell to $1.1150, its lowest since May 31. It held at $1.1158, down 0.45% on the day. The euro dipped 0.22% to 120.64 yen after touching 120.53, its lowest since Jan. 3. Britain's pound slipped as Boris Johnson, who has promised to lead Britain out of the European Union with or without deal by the end of October, as expected will replace Theresa May as prime minister. The pound was down 0.18% at $1.2456, within striking distance of a 27-month low of $1.2382 reached last week. It was 0.26% higher against euro at 89.585 pence after hitting a six-month low of 90.51 last week. ======================================================== Currency bid prices at 10:16AM (1416 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1157 $1.1208 -0.46% -2.72% +1.1209 +1.1153 Dollar/Yen JPY= 108.1100 107.8600 +0.23% -1.95% +108.2800 +107.8400 Euro/Yen EURJPY= 120.63 120.90 -0.22% -4.43% +121.0800 +120.6500 Dollar/Swiss CHF= 0.9833 0.9819 +0.14% +0.19% +0.9852 +0.9819 Sterling/Dollar GBP= 1.2455 1.2474 -0.15% -2.37% +1.2481 +1.2419 Dollar/Canadian CAD= 1.3145 1.3118 +0.21% -3.61% +1.3164 +1.3116 Australian/Doll AUD= 0.7005 0.7034 -0.41% -0.62% +0.7036 +0.7003 ar Euro/Swiss EURCHF= 1.0974 1.1006 -0.29% -2.49% +1.1019 +1.0973 Euro/Sterling EURGBP= 0.8957 0.8985 -0.31% -0.30% +0.9005 +0.8957 NZ NZD= 0.6708 0.6758 -0.74% -0.13% +0.6759 +0.6706 Dollar/Dollar Dollar/Norway NOK= 8.6822 8.6059 +0.89% +0.50% +8.6865 +8.6054 Euro/Norway EURNOK= 9.6885 9.6493 +0.41% -2.20% +9.7012 +9.6464 Dollar/Sweden SEK= 9.4651 9.4124 +0.13% +5.59% +9.4716 +9.4120 Euro/Sweden EURSEK= 10.5638 10.5502 +0.13% +2.92% +10.5775 +10.5486 (Reporting by Saikat Chatterjee in LONDON Editing by Catherine Evans)