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FOREX -Dollar index rises as Yellen sees another rate increase
February 14, 2017 / 5:47 PM / 10 months ago

FOREX -Dollar index rises as Yellen sees another rate increase

* Futures imply traders see higher chances of more U.S. rate
hikes
    * Dollar falls overnight after Trump aide Flynn resigns
    * Greenback trims losses as PPI posts biggest rise in over 4
years
    * French election concerns exert downward pressure on euro

 (Updates throughout, adds analyst quote)
    By Richard Leong
    NEW YORK, Feb 14 (Reuters) - The dollar rose to a three-week
peak against a basket of major currencies on Tuesday as
investors raised their outlook on a faster pace of U.S. rate
increases following comments from Federal Reserve Chair Janet
Yellen.
    Yellen's remarks reinforced recent remarks from other Fed
policy-makers who like to see a faster adjustment to rates seen
appropriate at this point of the economic expansion.
 
    "The tone is overall more hawkish than what the market had
expected. The market seems to be under-pricing an upcoming rate
hike," said Omer Eisner, chief market strategist at Commonwealth
Foreign Exchange Inc in Washington.
    U.S. interest rates futures implied traders saw about
a 43 percent chance of at least three rate increases in 2017, up
from 33 percent on Monday, CME Group's FedWatch program showed.
 
    "Waiting too long to remove accommodation would be unwise,"
Yellen said in prepared remarks before the U.S. Senate Banking
Committee, the first of her two-day testimony before Congress.
    Yellen is scheduled to appear before the House of
Representatives Financial Services Committee at 10 a.m. (1500
GMT) on Wednesday. 
    In overnight trading, the dollar index slipped after
U.S. President Donald Trump's national security adviser Michael
Flynn quit in a controversy relating to Russia.
    Flynn's resignation raised worries about the Trump
administration's ability to implement its economic policies,
including planned tax cuts, which have been seen as bullish for
the greenback and stocks. 
    The gauge of the greenback versus six major currencies
 pared its initial losses after data showed U.S. producer
prices posted the largest monthly rise in more than four years
in January, supporting the view that domestic inflation is
approaching the Fed's 2 percent goal. 
    The dollar index reached a three-week high at 101.38, 
reversing from a earlier drop to 100.90. It was last at 0.35
percent at 101.32.
    The greenback hit a two-week peak of 114.47 yen,
erasing an earlier decline against the Japanese currency. It was
last up 0.6 percent at 114.42 yen. 
    The euro fell 0.3 percent against the greenback at
$1.0567 amid political risk and disappointing regional economic
data. 
    The euro has come under pressure from concerns about
France's presidential election and Greek bailout talks.
    Investors have grown jittery about a possible repeat of
Brexit as polls showed National Front leader Marine Le Pen, who
has promised to pull France out of the euro zone and hold a
referendum on European Union membership, is leading in the
first-round of the French presidential runoff. 
========================================================
    Currency bid prices at 12:20PM (1720 GMT)
 Description      Last           U.S. Close  Pct Change
                                  Previous   
                                  Session    
 Euro/Dollar      $1.0566        $1.0597     -0.29%
 Dollar/Yen       114.4300       113.7300    +0.62%
 Euro/Yen         120.92         120.52      +0.33%
 Dollar/Swiss     1.0081         1.0051      +0.30%
 Sterling/Dollar  1.2452         1.2526      -0.59%
 Dollar/Canadian  1.3097         1.3070      +0.21%
 Australian/Doll  0.7630         0.7638      -0.10%
 ar                                          
 Euro/Swiss       1.0652         1.0660      -0.08%
 Euro/Sterling    0.8483         0.8457      +0.31%
 NZ               0.7140         0.7175      -0.49%
 Dollar/Dollar                               
 Dollar/Norway    8.4146         8.3883      +0.31%
 Euro/Norway      8.8916         8.8921      -0.01%
 Dollar/Sweden    8.9504         8.9395      -0.18%
 Euro/Sweden      9.4564         9.4736      -0.18%
    

 (Additional reporting by Yumna Mohamed in London; Editing by
Bill Trott and Will Dunham)

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