* Hawkish Fed officials increase rate hike expectations
* Trump speech has minimal market impact
(Updates market action, changes dateline from LONDON)
By Karen Brettell
NEW YORK, March 1 The dollar hit a seven-week
high on Wednesday after hawkish comments from two Federal
Reserve officials late on Tuesday increased expectations that
the U.S. central bank is closer to raising interest rates.
New York Fed President William Dudley, a permanent voter on
the U.S. central bank's open market committee, said the case for
tightening monetary policy "has become a lot more compelling."
John Williams, President of the San Francisco Fed, said a
rate increase was very much on the table for serious
consideration at the March meeting given full employment and
“Williams and Dudley are very strongly signaling the fact
that March is a live meeting, and that’s occurring against the
backdrop of consistently strong (economic) numbers,” said
Richard Franulovich, a senior currency strategist at Westpac
Banking Corporation in New York.
The Fed officials' comments sent Treasury yields higher, and
the U.S. dollar jumped 0.8 percent against a basket of six major
currencies, its highest since Jan. 11.
The greenback climbed 1.05 percent to touch a two-week high
of 113.92 yen and gained half a percent against the euro
Futures traders are now pricing in a 69 percent chance of a
Fed hike in March, up from 35 percent on Tuesday, according to
the CME Group’s FedWatch Tool.
Fed Chair Janet Yellen and Vice Chair Stanley Fischer are
both due to speak on Friday.
Data on Wednesday showed that U.S. consumer price inflation
jumped in January by 0.4 percent, the largest increase since
February 2013, while consumer spending increased 0.2 percent in
Rate expectations overshadowed a speech by U.S. President
Donald Trump late on Tuesday, which outlined broad tax cuts and
a $1 trillion public-private initiative to rebuild degraded
roads and bridges but failed to give specific details on the
China's yuan was down just 0.2 percent on the day.
The Chinese currency has been a target for markets given
Trump's previous aggressive talk on trade but has risen for the
past two months as the dollar's rally stalled.
The Mexican peso, seen as the most vulnerable to Trump's
protectionist policies, rose 0.29 percent to 20.04 pesos per
The dollar also rose against sterling, with the pound
falling below $1.23 for the first time since late January after
weak British manufacturing and credit data.
(Additional reporting by Ritvik Carvalho in London Editing by W