July 12, 2019 / 2:53 PM / 3 months ago

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 tmsnrt.rs/2egbfVh

 (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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