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US dollar unmoved by Fed rate talk

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Fresh speculation that the Federal Reserve could act sooner to raise interest rates hardly moved the dollar Tuesday even as short-term bond yields surged.

[NEW YORK] Fresh speculation that the Federal Reserve could act sooner to raise interest rates hardly moved the dollar Tuesday even as short-term bond yields surged.

There was little motion in the market despite stronger US economic data and relatively bullish commentary from two Federal Reserve policymakers.

The dollar was barely changed against the euro at US$1.1313, and against the yen at 109.13 yen.

After US consumer inflation data came in stronger than expected for April, and housing construction data showed a pickup, the two Fed officials said they could see two to three rate hikes this year, starting as early as June.

Together they sparked talk that market players were wrong in expecting only one small quarter-point increase would be decided by year-end.

San Francisco Fed chief John Williams said he was confident about the economy and that the pace of growth made two to three increases in 2016 appropriate, beginning as soon as the Fed's June 14-15 policy meeting.

More cautious about the June meeting, Atlanta Fed President Dennis Lockhart said it was too early to draw a firm conclusion about second-quarter economic data.

"I am at this stage inconclusive about how I am going to be thinking about June, but I wouldn't take it off the table," he said.

AFP