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Europe, Forex

Dollar slides 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 * Fed’s Evans says rate cuts needed to lift inflation * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds new comment, updates prices) By Gertrude Chavez-Dreyfuss NEW YORK, July 12 (Reuters) – The dollar weakened 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, posting its worst daily loss against the yen and Swiss franc in more than three weeks. 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. Joe Manimbo, senior market analyst, at Western Union Business Solutions in New York said the PPI increase should not shake U.S. rate cut expectations. 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 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. 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. That should be dollar-negative in general, analysts said. But Jane Foley, head of FX strategy at Rabobank in London, believes dollar weakness will not be as severe as many anticipated because other major central banks are easing as well. “The dovish stances of most other G10 central banks is offsetting the impact of potential Fed action on the U.S. dollar crosses,” Foley said, noting, for instance, that she expects the European Central Bank to cut its discount rate further into negative territory at its September meeting. The euro, as a result, has been on a downtrend since the beginning of the year, down 1.7%. However, the single currency on Friday rose 0.2% versus the dollar to $1.1271, after earlier slipping following comments from ECB Governing Council member Ignazio Visco saying the bank will need to adopt further expansionary measures if the euro zone economy does not pick up. He said the ECB will consider its options “in the coming weeks.” The market has also been monitoring Fed speakers. Chicago Fed President Charles Evans on Friday 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. ======================================================== Currency bid prices at 3:25PM (1925 GMT) Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar EUR= $1.1271 $1.1252 +0.17% -1.73% +1.1275 +1.1239 Dollar/Yen JPY= 107.8100 108.4800 -0.62% -2.22% +108.6000 +107.8100 Euro/Yen EURJPY= 121.54 122.09 -0.45% -3.71% +122.2300 +121.5200 Dollar/Swiss CHF= 0.9841 0.9900 -0.60% +0.28% +0.9908 +0.9837 Sterling/Dollar GBP= 1.2571 1.2519 +0.42% -1.46% +1.2575 +1.2519 Dollar/Canadian CAD= 1.3032 1.3072 -0.31% -4.44% +1.3078 +1.3018 Australian/Doll AUD= 0.7021 0.6973 +0.69% -0.40% +0.7025 +0.6971 ar Euro/Swiss EURCHF= 1.1093 1.1141 -0.43% -1.43% +1.1154 +1.1073 Euro/Sterling EURGBP= 0.8965 0.8988 -0.26% -0.21% +0.8991 +0.8956 NZ NZD= 0.6694 0.6659 +0.53% -0.34% +0.6698 +0.6659 Dollar/Dollar Dollar/Norway NOK= 8.5388 8.5386 +0.00% -1.16% +8.5583 +8.5199 Euro/Norway EURNOK= 9.6257 9.6115 +0.15% -2.83% +9.6264 +9.6054 Dollar/Sweden SEK= 9.3704 9.3805 +0.08% +4.54% +9.3910 +9.3603 Euro/Sweden EURSEK= 10.5644 10.5562 +0.08% +2.93% +10.5651 +10.5399 (Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Saikat Chatterjee in London; Editing by David Gregorio and Jonathan Oatis)


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