FOREX-Dollar slips for 2nd day on growing U.S. rate cut bets
12/06/2019 at 09:03
* Graphic: World FX rates in 2019
By Saikat Chatterjee
LONDON, June 12 (Reuters) - The dollar edged lower for a second
consecutive day on Wednesday on growing expectations of a U.S. rate
cut next week while high-yielding currencies suffered due to ongoing
Against a basket of its rivals , the dollar edged 0.1 percent
lower to 96.64 and just above a 2-1/2 month low of 96.46 hit last week.
Trade differences between the world's two biggest economies are
starting to reflect in data with Chinese factory inflation slowing in
May while recent comments by Fed officials have become increasingly
"The prospect of an unending trade dispute between the
world's two largest economies is a nightmare scenario and, despite
their respective government officials' comments, both the US and China
are seeing a steady deceleration in their domestic growth," said
Konstantinos Anthis, Dubai-based head of research at ADSS.
Those concerns have also undermined appetite for risky currencies
with the Australian dollar weakening 0.3% versus the Swiss franc
and the perceived safe-haven Japanese yen rising 0.2% against the dollar.
A Fed watch tool by CME assigns a 18% probability of a U.S. rate
cut next week and a 68% probability of a cut in July.
Rising rate cut bets have also been helped by easing inflation
pressures with underlying price pressures remaining muted. Core CPI
inflation is expected to print at 1.9% in May compared to 2% in April.
"We do not expect today’s CPI report to challenge the Fed’s
view that inflation is currently 'subdued'," MUFG strategists
said in a daily note.
The euro was broadly steady at $1.1360 and in close reach of a
three-month peak of $1.1348 scaled on Friday.
The single currency was little affected by U.S. President Donald
Trump's accusation that Europe was devaluing the euro, which has
gained roughly 1.4% against the dollar so far in June.
(Reporting by Saikat Chatterjee; Editing by Andrew Cawthorne)
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