FOREX-Dollar takes a spill on rate-cut view by Fed's Williams

Reuters

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    * Fed's Clarida builds case for insurance U.S. rate cuts 
    * Dollar index breaks below 200-day moving average
    * Mnuchin says no change to use of stabilization fund 
    * ECB staff studying change to its 2% inflation goal -report
    * Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

 (Updates market action, adds quote)
    By Richard Leong
    NEW YORK, July 18 (Reuters) - The dollar fell broadly on
Thursday as an influential Federal Reserve official bolstered
bets on a preemptive interest rate cut later this month because
rates and inflation are low even as the U.S. economy has been
expanding.
    Fed policymakers cannot afford to keep their "powder dry"
and wait for potential economic problems to materialize, New
York Federal Reserve President John Williams said at a central
banking conference.  urn:newsml:reuters.com:*:nN9N23A01H
    His comments jolted a somnolent foreign exchange market,
where the greenback had held steady against most major
currencies.
    Williams "is sounding very dovish," said Paresh Upadhyaya,
director of currency strategy at Amundi Pioneer Investments in
Boston. "The dollar has been taking cues from the interest rates
market."
    U.S. rates futures implied traders fully expect the Fed to
lower rates in two weeks. They now see a 71% chance of a 50
basis point rate cut  FFN9   FFQ , more than double the level
implied late on Wednesday, CME Group's FedWatch tool showed.
    Williams' rate-cut view was echoed by Fed Vice Chair Richard
Clarida, who told Fox Business Network the central bank might
have to act early and not wait "until things get so bad."
 urn:newsml:reuters.com:*:nS0N1YO050
    In late U.S. trading, an index that tracks the dollar
against a basket of currencies  .DXY  was down 0.52% at 96.713.
It broke below its 200-day moving average of 96.806, a technical
signal that portends further weakness for the dollar.
    The dollar did not budge after U.S. Treasury Secretary
Steven Mnuchin told Bloomberg earlier on Thursday there has been
"no change to the dollar policy." He later told Reuters that
there was no change to the use of a $94.6 billion federal fund
intended to stabilize currencies during times of market turmoil.
    There has been speculation whether the White House would
intervene to weaken the dollar after U.S. President Donald Trump
lashed out at Europe and China earlier this month for what he
called their "big currency manipulation game."  urn:newsml:reuters.com:*:nL2N2440MA 
    The dollar fell to a three-week low  JPY=EBS  at 107.210
yen.     
    The euro was up 0.44% at $1.1275.
    The single currency dipped earlier Thursday following a
Bloomberg report that ECB staff members are studying a potential
change to the bank's inflation goal of "near 2%."  urn:newsml:reuters.com:*:nL8N24J2NQ
    Such a move would potentially leave the door open for more
ECB stimulus to continue for a longer period, which would exert
downward pressure on the single currency.
    Among other big gainers against the dollar, the pound
 GBP=D3  was up 0.98% at $1.2552 after hitting a 27-month low of
$1.2382 the previous day. 
    The Aussie dollar  AUD=D4  rose 0.88%, while the New Zealand
dollar  NZD=D4  gained 0.70%.
========================================================
    Currency bid prices at 4:07PM (2007 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1273        $1.1223     +0.45%         -1.71%      +1.1280     +1.1206
 Dollar/Yen       JPY=        107.2700       107.9400    -0.62%         -2.71%      +108.0100   +107.2200
 Euro/Yen         EURJPY=     120.95         121.13      -0.15%         -4.18%      +121.2300   +120.8000
 Dollar/Swiss     CHF=        0.9816         0.9873      -0.58%         +0.02%      +0.9891     +0.9810
 Sterling/Dollar  GBP=        1.2548         1.2431      +0.94%         -1.64%      +1.2558     +1.2428
 Dollar/Canadian  CAD=        1.3033         1.3047      -0.11%         -4.43%      +1.3095     +1.3029
 Australian/Doll  AUD=        0.7070         0.7009      +0.87%         +0.30%      +0.7076     +0.7007
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1067         1.1080      -0.12%         -1.66%      +1.1089     +1.1061
 Euro/Sterling    EURGBP=     0.8982         0.9025      -0.48%         -0.02%      +0.9039     +0.8980
 NZ               NZD=        0.6779         0.6730      +0.73%         +0.92%      +0.6786     +0.6730
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.5394         8.5889      -0.58%         -1.15%      +8.6086     +8.5346
 Euro/Norway      EURNOK=     9.6275         9.6395      -0.12%         -2.81%      +9.6630     +9.6244
 Dollar/Sweden    SEK=        9.3022         9.3653      -0.21%         +3.78%      +9.3752     +9.3020
 Euro/Sweden      EURSEK=     10.4908        10.5132     -0.21%         +2.21%      +10.5275    +10.4909
    

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
GRAPHIC-Bets on bold first rate-cut from the Fed     https://tmsnrt.rs/2XTkkpn
GRAPHIC-Bets on bold first rate-cut from the Fed interactive   
https://tmsnrt.rs/2Y3UHTf
GRAPHIC-Dollar index, trade-weighted dollar index     https://tmsnrt.rs/32qMZ82
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Richard Leong in New York and Saikat Chatterjee
in London; Editing by Kevin Liffey, Dan Grebler and Will Dunham)
 ((richard.leong@thomsonreuters.com; +1 646 223 6313; Reuters
Messaging: richard.leong.thomsonreuters.com@thomsonreuters.net;
Twitter @RichardLeong2))

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