FOREX-Dollar pares gains as odds of 100bp cut from Fed rate hike

(Adds details, quotes, comments from Fed officials, updates prices) *Chart: Global exchange rates By Karen Brettell NEW YORK, July 14 (Reuters) – The dollar pared gains on Thursday after two Reserve officials said they favored a 75 basis point hike at the U.S. central bank’s July meeting, slashing the odds of a further move. agressive. Traders stepped up bets that the Fed will hike rates even faster after data on Wednesday showed annual U.S. consumer prices jumped 9.1% in June, the strongest increase in more than four decades. However, the odds of a 100 basis point move dipped after Fed Governor Christopher Waller said he backed another 75 basis point hike in interest rates at the Fed meeting. general central bank policy later this month, but that it would tilt for a bigger hike if new data shows demand. not slowing fast enough to reduce inflation. St. Louis Fed President James Bullard also said he would prefer to raise interest rates 75 basis points at the July 26-27 central bank meeting. Fed funds futures now point to a 31% chance of a 100 basis point hike, down from around 70% previously, and a 69% chance of a 75 basis point hike. The dollar index was last at 108.50, up 0.22% on the day, after jumping to 109.29, the highest since September 2002. The euro fell to 1.0031 $, after falling to 99.52 US cents, the weakest since December 2002. The greenback is expected to continue higher as it benefits from higher rate hike prospects than other global central banks, including the Central Bank European. “Europe is going to have a harder time and you’re probably going to see the Fed going to get very aggressive, and the interest rate differential going to get very powerful throughout next year,” said Edward Moya, senior market analyst at OANDA in New York. Trading was volatile on Thursday as the euro hit a 20-year low after a party in Italian Prime Minister Mario Draghi’s coalition government failed to back a parliamentary confidence vote that included measures to offset the cost of living crisis. Draghi then resigned. The dollar also jumped to a 24-year high against the yen as Japan’s central bank maintains a dovish stance that contrasts with hawkish moves by other central banks. “There is clearly a broader preference for the dollar in the markets at the moment given the broader context of current geopolitical uncertainty, pressures in Europe from the energy supply situation and expectations of rate hikes. of interest in the United States,” said Shaun Osborne, head of FX. strategist at Scotiabank. The Canadian dollar fell a day after the Bank of Canada raised its benchmark interest rate by one percentage point, its biggest rise since 1998. The loonie could also be weaker because aggressive rate hikes are fueling fears of an economic slowdown, Osborne said. “Investors are concerned that the Bank of Canada is potentially moving too fast, too quickly, a policy error is believed to be made here with a 100 basis point hike given the vulnerabilities in the housing sector,” said Osborne. The greenback gained 0.98% against the loonie at C$1.3102. It had previously hit C$1.3224, the highest since November 2020. The Australian dollar fell on global growth concerns to 66.825 US cents, the lowest since May 2020. ======== ========== ==================================== Price of the Currency Bid at 15:00 (1900 GMT) Description RIC Last US Close Pct Change YTD Pct Highest Bid Lowest Bid Previous Session Dollar Index 108.5000 108.2700 +0.22% 13.419% +109.2900 + 108.1900 Euro/Dollar $1.0031 $1.0059 -0.27% -11.76% +$1.0066 +$0.9952 Dollar/Yen 138 138% + 20.62% +139.3800 +137.3550 Euro / Yen 139.29 138.19 +0.80% +6.88% +139.7700 +138.0000 Dollar / Swiss 0.9828 0.9792 +0.39% +7.77% +0.985 +0.9789 STERLING / Dollar 1, 1835 1.185 1.1895. $1.1892 + $1.1761 / Canadian 1.3102 1.2979 + 0.98% + 3.66% +1.3223 +1.2975 Aussie / Dollar $0.6758 $0.6759 -0.01 % -7.04% + 0.6787 + 0.6683 EURO / SWISS 0.9858 0.9845 + 0.6683 EURO / SWISS 0.9858 0.9845 + 0.6683. Pound sterling 0.8474 0.8459 +0.18% +0.88% +0.8496 +0.8441 NZ $0.6130 $0.6132 +0.00% -10.42% +$ 0.6134 + 0 .6062 $ / dollar / dollar / Norway 10.2155 10.2030 +0.24% +16.09% +10.3500 +10.1960 Euro / Norway 10.2489 10.2586 -0.09% +2.36% +10.3192 +10.2360 Dollar / Sweden 10.5658 10.5527 -0.040. 10.5311 Euro/Sweden 10.5992 10.6030 -0.04% +3.57% +10.6367 +10.5918 (Reporting by Karen Brettell; editing by Jonathan Oatis and Richard Chang)

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