* Dollar on best winning streak in daily terms since 2012
* Swedish crown falls after Riksbank statement
* Sterling hit by slowing of wage growth
* All eyes on U.S. consumer inflation print
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Feb 15 The dollar chalked up its 11th
straight daily rise on Wednesday, as investors' focus moved to
inflation data in the United States for more support for the
idea of a rise in Federal Reserve interest rates next month.
European trade in the major currencies was dominated by dips
for the Swedish crown and sterling after the
Riksbank and a report on the UK labour market sounded cautious
notes on their respective economic outlooks
Fed chief Janet Yellen testifies for a second day in
Congress after spurring more gains for the dollar on Tuesday by
telling lawmakers that the U.S. central bank would consider
raising rates at one of its "upcoming" meetings.
For markets that pointed to a hike in either March or May.
It also opens the door to the Fed raising the return for holding
dollars more than twice before the end of the year, beyond what
investors have currently priced into short-term interest rates.
Consumer inflation is forecast to have risen to 2.4 percent
in January and producer price numbers on Tuesday were generally
higher than expected. The dollar's run of daily gains is now its
longest since the peak of the euro zone's debt crisis in 2012.
"After Yellen's testimony, CPI data are the pick of the week
for the U.S.," said Elsa Lignos, senior currency strategist with
RBC Capital Markets. "The risks are skewed to a higher print,
particularly given the consumer component from yesterday's
strong PPI data."
The CME FedWatch indicator puts the chances of a rise in
March at just 17 percent, but some market participants say the
pricing of market interest rates points to odds of 30 percent or
more, rising to more than 50 percent for May.
The dollar index, which measures the currency against
its six major peers, was last up 0.2 percent at 101.43, its
highest since Jan. 20. It rose 0.3 percent to 114.58 yen and
$1.0552 per euro.
"It is all about the dollar for now," analysts from Bank of
America Merrill Lynch said in a report forecasting the euro to
weaken to $1.02 in the months ahead. "We expect U.S. fiscal
stimulus, which together with political risks in Europe should
help to weaken the euro in the first half of the year."
Like a number of other major investment houses, it was less
confident, however, about the dollar's ability to push past
parity after a series of failures over the past two years.
While the dollar has gained steadily so far in February, the
enthusiasm among investors that drove it higher after Donald
Trump's election, assuming he would reflate the U.S. economy,
has been muted by concerns over protectionist trade policy and
his attitude to the dollar.
The row over national security adviser Mike Flynn this week
has only added to that political noise.
"It's the policy mix that has troubled us since the
election, this trade off between 'good' dollar policies and
other policies that are more problematic for the currency," said
Paul Meggyesi, a strategist with JP Morgan in London.
"We did flip two weeks ago to a modest net short against the
franc and the yen. Chances are the dollar, as it has been doing
in recent weeks, will drift around in a tight consolidative
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Editing by Larry King)