FOREX-Dollar drifts higher in thin summer trading; upside capped

* Currencies still driven by tug of war between central banks * Focus on upcoming U.S. data * Mnuchin voices concern about Facebook's Libra * Bitcoin holds gains, rallies from 2-week low * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds new analyst comments, bitcoin, updates prices, FX table) By Gertrude Chavez-Dreyfuss NEW YORK, July 15 (Reuters) - The dollar edged higher on Monday in thin summer trading, with its potential upside limited by expectations the Federal Reserve will cut interest rates at next week's policy meeting. Investors expect the Fed to reduce its key rate by 25 basis points and make another cut in September. "A 25-basis-point cut is fully priced into the market but there is currently a 20% chance of a 50-basis-point cut, which is weighing on the dollar," said Joe Manimbo, senior market analyst, at Western Union Business Solutions in Washington. "The data this week could be key in tilting the probabilities of future rate cuts or a 50-basis-point cut this July," he added. U.S. retail sales and industrial production data are due on Tuesday, while the Fed will release its key Beige Book on U.S. economic conditions on Wednesday. Foreign exchange markets were quiet overall on Monday and volatility low ahead of major central bank policy decisions next week. The European Central Bank also holds a meeting next week, with investors expecting a dovish statement. Money markets have priced in an ECB rate cut of 10 basis points in September and another one in March. The ECB's meeting on July 25 may reinforce those expectations. Forecasts for dovish moves by both the Fed and ECB have kept euro/dollar stuck in a narrow range for weeks. In afternoon trading, an index that tracks the dollar against a basket of six other major currencies was up 0.2% at 96.956. The dollar was flat versus the yen at 107.91. The euro was slightly down at $1.1255, trading within the recent range of $1.14 to $1.11. Investors are more bearish on the euro, since U.S. Treasury yields look set to remain among the highest in developed markets despite future Fed rate cuts, analysts say. In the cryptocurrency market, bitcoin rallied from two-week lows to $10,941, up more than 7% on the day. U.S. Treasury Secretary Steve Mnuchin on Monday voiced serious concern that Facebook Inc's proposed Libra cryptocurrency could be misused for money laundering, adding to the growing regulatory skepticism of the social media company's digital asset plans. He added that cryptocurrencies will be discussed at the upcoming Group of Seven meeting. Edward Moya, senior market analyst at OANDA in New York, said despite Mnuchin's concerns, bitcoin held its gains because the U.S. Treasury's top official did not unveil new regulatory action that could severely hinder the development of cryptocurrencies. Elsewhere, the Australian dollar, the currency most sensitive to Chinese news, rose to a more than one-week high on stronger-than-expected economic data from China. China's industrial output rebounded in June from a 17-year low in May, while June retail sales surged 9.8% from a year earlier. The Aussie was last up 0.2% at US$0.7036 against the U.S. dollar, while China's offshore yuan was up 0.1% at 6.8742 yuan per dollar. ======================================================== Currency bid prices at 3:18PM (1918 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1255 $1.1269 -0.12% -1.86% +1.1284 +1.1254 Dollar/Yen JPY= 107.9200 107.8900 +0.03% -2.12% +108.1000 +107.8100 Euro/Yen EURJPY= 121.47 121.60 -0.11% -3.76% +121.8400 +121.4300 Dollar/Swiss CHF= 0.9845 0.9840 +0.05% +0.32% +0.9854 +0.9818 Sterling/Dollar GBP= 1.2517 1.2573 -0.45% -1.88% +1.2579 +1.2511 Dollar/Canadian CAD= 1.3049 1.3029 +0.15% -4.31% +1.3051 +1.3021 Australian/Doll AUD= 0.7036 0.7017 +0.27% -0.18% +0.7038 +0.7009 ar Euro/Swiss EURCHF= 1.1084 1.1092 -0.07% -1.51% +1.1102 +1.1067 Euro/Sterling EURGBP= 0.8990 0.8960 +0.33% +0.07% +0.9003 +0.8961 NZ NZD= 0.6717 0.6690 +0.40% +0.00% +0.6734 +0.6679 Dollar/DolLar Dollar/Norway NOK= 8.5383 8.5309 +0.09% -1.16% +8.5497 +8.5236 Euro/Norway EURNOK= 9.6136 9.6137 +0.00% -2.95% +9.6292 +9.6129 Dollar/Sweden SEK= 9.3526 9.3769 -0.40% +4.34% +9.3772 +9.3518 Euro/Sweden EURSEK= 10.5292 10.5710 -0.40% +2.58% +10.5690 +10.5275 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Olga Kotaga in London Editing by Alistair Bell)