13 June 2006, 11:57  US dollar firmer higher on hopes of another Fed rate hike

The US dollar was firmer against major currencies, supported by hopes of another quarter point hike by the US Federal Reserve policy rate this month, dealers said. At 2.50 pm (0650 GMT), the dollar was trading at 114.65 yen from 114.43 in Tokyo early today while the euro eased slightly to 1.2575 usd from 1.2580 in Tokyo. Dealers said comments from Fed officials Sandra Pianalto and Susan Schmidt have reinforced the view in the market that a fresh 25 basis points rate hikeis in the offing at the next meeting, lifting the Fed fund target rate to 5.25 pct. Bies noted that the US economy was running above potential, which may have inflationary consequences, while Pianalto said that the inflation picture exceeded her comfort level. UOB Treasury Research, meanwhile, noted that the greenback's rise may soon ease back, with the unit moving in an increasingly narrow range, as investors turn cautious ahead of the release of May consumer price index data in the US on Wednesday. "Though a bevy of data/events vie for the spotlight today, markets are likely to largely remain within ranges ahead of the key US CPI data on Wednesday," it added.

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