* 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 .DXY , 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 EUR= , 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
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US real interest rates and DXY https://tmsnrt.rs/32niorZ
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