FOREX-U.S. dollar steady as case for Fed's pause solidifies

(New throughout; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, Nov 13 (Reuters) - The U.S. dollar was stable on
Wednesday after October consumer price inflation was greater
than expected and Federal Reserve Chair Jerome Powell offered an
optimistic outlook for the economy, further solidifying the
case for the central bank to pause its monetary easing cycle.
Expectations for an interest rate cut do not rise above 30%
before July 2020, according to CME Group's FedWatch tool. And
the slim chances of a cut in the months prior on Wednesday
became slimmer.
U.S. consumer prices jumped by the most in seven months in
October, a report from the Labor Department on Wednesday showed,
as the cost of healthcare surged by the most in more than three
years. The Fed uses interest rate hikes to rein in inflation,
making a near-term cut slightly less likely. In addition, Powell on Wednesday said he saw "sustained
expansion" ahead for the country's economy, with low
unemployment boosting household spending and the full impact of
the three interest rate cuts in the past three months still to
be felt. Powell was "very consistent with the message from the
(October) press conference, which is what we expected - that
they're on hold unless something goes unexpectedly wrong," said
Daniel Katzive, head of foreign exchange strategy for North
America at BNP Paribas.
"Now the burden of proof is on the data to force the Fed to
do something to ease."
The dollar index .DXY was up 0.04% to 98.352 and the
greenback gained 0.03% against the euro EURO= to $1.100.
Also on Wednesday, the Swiss franc rallied to a one-month
high against the euro EURCHF= as hedge funds unwound some of
their negative bets against the currency and as appetite for
risky assets faltered.
Boosting demand for safe-haven assets were the police
crackdown against protesters in Hong Kong and a speech by U.S.
President Donald Trump in which he threatened to raise tariffs
on China and criticized European Union trade policies before a
Nov. 14 deadline to decide whether to raise tariffs on European
and Japanese carmakers.
Hedge funds had ramped up short bets against the franc in
the last two weeks on expectations a trade pact between
Washington and Beijing would fuel demand for risky assets and
boost carry-trades where investors borrow in cheap currencies
and invest in riskier ones.
"The main thing we seem to be doing in FX today is following
a bit of a risk-off tendency," said Katzive. "The thinking there
is that the market had gotten priced for a pretty constructive
outlook of reduced recession risk, reduced trade risk and (is)
now paring back some of that optimism."