* Fed's Clarida builds case for insurance U.S. rate cuts
* Dollar index breaks below 200-day moving average
* Mnuchin says no change to use of stabilization fund
* ECB staff studying change to its 2% inflation goal -report
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
(Updates market action, adds quote)
By Richard Leong
NEW YORK, July 18 (Reuters) - The dollar fell broadly on
Thursday as an influential Federal Reserve official bolstered
bets on a preemptive interest rate cut later this month because
rates and inflation are low even as the U.S. economy has been
expanding.
Fed policymakers cannot afford to keep their "powder dry"
and wait for potential economic problems to materialize, New
York Federal Reserve President John Williams said at a central
banking conference. His comments jolted a somnolent foreign exchange market,
where the greenback had held steady against most major
currencies.
Williams "is sounding very dovish," said Paresh Upadhyaya,
director of currency strategy at Amundi Pioneer Investments in
Boston. "The dollar has been taking cues from the interest rates
market."
U.S. rates futures implied traders fully expect the Fed to
lower rates in two weeks. They now see a 71% chance of a 50
basis point rate cut FFN9 FFQ , more than double the level
implied late on Wednesday, CME Group's FedWatch tool showed.
Williams' rate-cut view was echoed by Fed Vice Chair Richard
Clarida, who told Fox Business Network the central bank might
have to act early and not wait "until things get so bad."
In late U.S. trading, an index that tracks the dollar
against a basket of currencies .DXY was down 0.52% at 96.713.
It broke below its 200-day moving average of 96.806, a technical
signal that portends further weakness for the dollar.
The dollar did not budge after U.S. Treasury Secretary
Steven Mnuchin told Bloomberg earlier on Thursday there has been
"no change to the dollar policy." He later told Reuters that
there was no change to the use of a $94.6 billion federal fund
intended to stabilize currencies during times of market turmoil.
There has been speculation whether the White House would
intervene to weaken the dollar after U.S. President Donald Trump
lashed out at Europe and China earlier this month for what he
called their "big currency manipulation game."
The dollar fell to a three-week low JPY=EBS at 107.210
yen.
The euro was up 0.44% at $1.1275.
The single currency dipped earlier Thursday following a
Bloomberg report that ECB staff members are studying a potential
change to the bank's inflation goal of "near 2%." Such a move would potentially leave the door open for more
ECB stimulus to continue for a longer period, which would exert
downward pressure on the single currency.
Among other big gainers against the dollar, the pound
GBP=D3 was up 0.98% at $1.2552 after hitting a 27-month low of
$1.2382 the previous day.
The Aussie dollar AUD=D4 rose 0.88%, while the New Zealand
dollar NZD=D4 gained 0.70%.
========================================================
Currency bid prices at 4:07PM (2007 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1273 $1.1223 +0.45% -1.71% +1.1280 +1.1206
Dollar/Yen JPY= 107.2700 107.9400 -0.62% -2.71% +108.0100 +107.2200
Euro/Yen EURJPY= 120.95 121.13 -0.15% -4.18% +121.2300 +120.8000
Dollar/Swiss CHF= 0.9816 0.9873 -0.58% +0.02% +0.9891 +0.9810
Sterling/Dollar GBP= 1.2548 1.2431 +0.94% -1.64% +1.2558 +1.2428
Dollar/Canadian CAD= 1.3033 1.3047 -0.11% -4.43% +1.3095 +1.3029
Australian/Doll AUD= 0.7070 0.7009 +0.87% +0.30% +0.7076 +0.7007
ar
Euro/Swiss EURCHF= 1.1067 1.1080 -0.12% -1.66% +1.1089 +1.1061
Euro/Sterling EURGBP= 0.8982 0.9025 -0.48% -0.02% +0.9039 +0.8980
NZ NZD= 0.6779 0.6730 +0.73% +0.92% +0.6786 +0.6730
Dollar/Dollar
Dollar/Norway NOK= 8.5394 8.5889 -0.58% -1.15% +8.6086 +8.5346
Euro/Norway EURNOK= 9.6275 9.6395 -0.12% -2.81% +9.6630 +9.6244
Dollar/Sweden SEK= 9.3022 9.3653 -0.21% +3.78% +9.3752 +9.3020
Euro/Sweden EURSEK= 10.4908 10.5132 -0.21% +2.21% +10.5275 +10.4909
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GRAPHIC-Bets on bold first rate-cut from the Fed https://tmsnrt.rs/2XTkkpn
GRAPHIC-Bets on bold first rate-cut from the Fed interactive
https://tmsnrt.rs/2Y3UHTf
GRAPHIC-Dollar index, trade-weighted dollar index https://tmsnrt.rs/32qMZ82
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