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Europe, Forex

Dollar slips for 3rd day on U.S. rate cut bets

* U.S. produce prices rise modestly * Futures market sees U.S. rate cut in July * Euro slightly lower after comments from ECB official * Graphic: World FX rates in 2019 (New throughout, updates prices, market activity and comments, FX table; new byline, changes dateline, previous LONDON) By Gertrude Chavez-Dreyfuss NEW YORK, July 12 (Reuters) – The dollar fell for a third straight session on Friday, still pressured by expectations the Federal Reserve will start cutting interest rates at a monetary policy meeting later this month. Against a basket of other currencies, the dollar fell 0.1% to 97.004, and also posted losses against the yen and Swiss franc. The dollar briefly trimmed losses after U.S. data showed producer prices rose slightly in June, up 0.1% following a similar gain in May. In the 12 months through June, the PPI rose 1.7%, the smallest gain since January 2017, slowing further from a 1.8% increase in May. “Evidence of higher inflation will be warmly received by the Fed,” said Joe Manimbo, senior market analyst, at Western Union Business Solutions in New York. But until the Fed’s preferred gauge of inflation, the core personal consumption expenditures price (PCE) index, shows convincing signs of heating up from a low 1.6%, the Fed is unlikely to change its stance on cutting rates as soon as later this month, he added. The producer prices data followed a report on Thursday showing the core U.S. consumer price index, excluding food and energy, rose 0.3% in June, the largest increase since January 2018, data on Thursday showed. The CPI reading pushed U.S. Treasury yields higher, but money markets still indicated one rate cut at the end of July and a cumulative 64 basis points in cuts by the end of 2019, especially after Fed Chairman Jerome Powell flagged such a move in his two-day testimony before Congress this week. The dollar’s weakness revived carry trades, where investors borrow in low-yielding currencies such as the Swiss franc and the euro to purchase higher-yielding ones such as the Australian or New Zealand dollars. The euro slipped versus the dollar after European Central Bank Governing Council member Ignazio Visco said the ECB will need to adopt further expansionary measures if the euro zone economy does not pick up and will consider its options “in the coming weeks”. The single currency was last at $1.3051, down 0.1%. The market has been monitoring Fed speakers. Chicago Fed President Charles Evans said the U.S. economy still has “very solid fundamentals” with a vibrant labor market. He said he viewed the Fed’s monetary policy as neutral, but it could be more accommodative if the goal is to lift inflation. New York Fed President John Williams will speak on Monday. ======================================================== Currency bid prices at 10:29 AM (1429 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1248 $1.1252 -0.04% -1.93% +1.1275 +1.1239 Dollar/Yen JPY= 108.0600 108.4800 -0.39% -2.00% +108.6000 +108.0600 Euro/Yen EURJPY= 121.57 122.09 -0.43% -3.68% +122.2300 +121.5500 Dollar/Swiss CHF= 0.9856 0.9900 -0.44% +0.43% +0.9908 +0.9845 Sterling/Dollar GBP= 1.2548 1.2519 +0.23% -1.63% +1.2554 +1.2519 Dollar/Canadian CAD= 1.3043 1.3072 -0.22% -4.36% +1.3078 +1.3018 Australian/Doll AUD= 0.6993 0.6973 +0.29% -0.79% +0.7009 +0.6971 ar Euro/Swiss EURCHF= 1.1089 1.1141 -0.47% -1.47% +1.1154 +1.1073 Euro/Sterling EURGBP= 0.8963 0.8988 -0.28% -0.23% +0.8991 +0.8961 NZ NZD= 0.6671 0.6659 +0.18% -0.68% +0.6691 +0.6659 Dollar/Dollar Dollar/Norway NOK= 8.5541 8.5386 +0.18% -0.98% +8.5568 +8.5199 Euro/Norway EURNOK= 9.6217 9.6115 +0.11% -2.85% +9.6239 +9.6054 Dollar/Sweden SEK= 9.3803 9.3805 -0.04% +4.65% +9.3910 +9.3603 Euro/Sweden EURSEK= 10.5517 10.5562 -0.04% +2.82% +10.5619 +10.5399 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; Editing by David Gregorio)

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