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FOREX-Dollar hits one-month high on rate-hike view, sterling falls
June 20, 2017 / 4:20 PM / 5 months ago

FOREX-Dollar hits one-month high on rate-hike view, sterling falls

    * Dollar index reaches highest since mid-May
    * Sterling slides after rates signal from BoE's Carney
    * Fed's Dudley says wages, inflation should pick up

 (Updates market action; changes dateline, previous PARIS)
    By Richard Leong
    NEW YORK, June 20 (Reuters) - The dollar reached a one-month high on Tuesday
against a basket of currencies on the view the Federal Reserve may raise
interest rates once more this year, while sterling tumbled after the Bank of
England's head threw cold water on the notion it was close to raising rates.
    The greenback grinded higher in the aftermath of comments from New York Fed
President William Dudley on Monday who said further improvement in the U.S.
labor market would kindle inflation, which has shown signs of flagging in recent
months. This would leave the door open for the possibility of another rate hike
by year-end after two hikes so far this year.
    The U.S. central bank as expected raised key overnight borrowing costs by a
quarter point to 1.00-1.25 percent last Wednesday.
    "We had a hawkish Fed last week. We seemed to have had a delayed reaction as
the dollar had been oversold," said Mazen Issa, senior currency strategist at TD
Securities in New York.
    Since last week's Fed meeting, a few policy-makers expressed caution about
another rate increase in the coming months due to a recent string of
disappointing inflation data.
    Chicago Fed President Charles Evans said on Monday it may be worthwhile for
the U.S. central bank to wait until year-end to decide whether to raise interest
rates again.
    "Bill Dudley commonly represents the majority view on the FOMC (Federal Open
Market Committee) - this is the main reason why the dollar is appreciating,"
said Commerzbank strategist Thu Lan Nguyen, in Frankfurt. "Evans was more dovish
but he's known to be dovish."
    The index that tracks the greenback versus the euro, yen and four other
currencies was up 0.3 percent at 97.811 after touching 97.871 earlier
Tuesday, which was the highest since May 18.
    The dollar fared best against the British pound among the group of
currencies. It gained more than a cent against the pound after BoE Governor Mark
Carney said now was not the time to raise U.K. interest rates. Last week three
BoE policymakers had voted in favor of a rate hike.
    But Carney warned of weak wage growth and a likely hit to incomes as Britain
prepares to leave the European Union, sending sterling to a two-month low of
    Currency bid prices at 11:56AM (1556 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
 Euro/Dollar      EUR=        $1.1122        $1.1148     -0.23%         +5.79%      +1.1165     +1.1121
 Dollar/Yen       JPY=        111.5100       111.5100    +0.00%         -4.59%      +111.7800   +111.3200
 Euro/Yen         EURJPY=     124.02         124.31      -0.23%         +0.71%      +124.6300   +124.0500
 Dollar/Swiss     CHF=        0.9760         0.9754      +0.06%         -4.11%      +0.9764     +0.9726
 Sterling/Dollar  GBP=        1.2623         1.2732      -0.86%         +2.33%      +1.2757     +1.2603
 Dollar/Canadian  CAD=        1.3269         1.3216      +0.40%         -1.20%      +1.3284     +1.3205
 Australian/Doll  AUD=        0.7571         0.7594      -0.30%         +4.93%      +0.7623     +0.7573
 Euro/Swiss       EURCHF=     1.0857         1.0874      -0.16%         +1.31%      +1.0881     +1.0852
 Euro/Sterling    EURGBP=     0.8809         0.8751      +0.66%         +3.42%      +0.8834     +0.8739
 NZ               NZD=        0.7235         0.7230      +0.07%         +4.24%      +0.7267     +0.7221
 Dollar/Norway    NOK=        8.5610         8.4999      +0.72%         -0.88%      +8.5656     +8.4634
 Euro/Norway      EURNOK=     9.5259         9.4776      +0.51%         +4.84%      +9.5335     +9.4414
 Dollar/Sweden    SEK=        8.7897         8.7414      +0.37%         -3.49%      +8.7988     +8.7257
 Euro/Sweden      EURSEK=     9.7786         9.7427      +0.37%         +2.07%      +9.7934     +9.7344

 (Additional reporting by Jemima Kelly in Paris; Masayuki Kitano in Singapore;
Editing by Hugh Lawson and Chris Reese)

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