FOREX-Dollar looks stronger as euro and sterling dip

    * Dollar index gains, Euro and pound fall 
    * Currency markets look head to Fed meeting
    * Graphic: World FX rates

 (Updates prices, adds commentary, changes byline, previous dateline London)
    By Sinéad Carew
    NEW YORK, June 11 (Reuters) - The euro and sterling dipped against the dollar on Friday as investors bet
interest rates would stay lower for longer in Europe and Britain while looking ahead to next week's U.S.
monetary policy meeting.
    The dollar index, showing its strongest weekly gain since early May, was last up 0.57% on the day
at 90.5810 while the euro was down 0.63% at $1.2099, on track for its biggest weekly decline since the end
of April.
    A day after the European Central Bank stuck to its dovish stance, ECB policymaker Klaas Knot said that
flexible fiscal rules would be needed for years as monetary policy remains constrained.

    "ECB policy makers are indicating that inflation rates are way below levels that are needed to put
upward pressure on rates," said Karl Schamotta, chief market strategist at Cambridge Global Payments in
    "That's cutting away at the euro's recent rally, putting some downward pressure on it. The biggest
contributor to the move we've seen overnight is the (euro) weakness as opposed to idiosyncratic dollar
positive forces. The dollar's winning the reverse beauty contest," Schamotta added.
    Sterling was down 0.54% at $1.4098 as traders worried about slower-than-expected growth as the
rapid spread of the Delta variant in Britain raised concerns that much of the country may not be able to
fully reopen from a COVID-19 pandemic-related lockdown on June 21, as previously hoped.

    Currency markets had been sluggish all week in anticipation of Thursday's release of U.S. consumer
prices, which rose 5% year-on-year in May.
    But even with the number above expectations, there was little market reaction. Investors seemed to back
the Federal Reserve's assertion that high inflation would be temporary.
    Economists see the central bank announcing in August or September a strategy for reducing its massive
bond-buying program, but do not expect it to start cutting monthly purchases until early next year, a
Reuters poll found.
    Traders were still preparing for volatility around the Federal Open Market Committee meeting scheduled
for the week ahead, according to Greg Anderson, global head of foreign exchange strategy at BMO Capital
    "If you're starting from a position where you're already short dollars, since FOMC meetings often have a
lot of volatility, you might reduce your short for risk management purposes," Anderson said. 
    Meanwhile investors left riskier currencies such as the Australian dollar, which was down 0.72%
at $0.7697 after hitting its lowest level for the week while the New Zealand dollar was off 1.01% at $0.7123
after touching its lowest level since May 4.
    In cryptocurrencies, bitcoin, which recovered slightly in recent sessions, was on track for a 3% weekly
gain and last up 0.3% at $36,817.94 on the day. Ether was last down 3% and set for an 11.7% weekly drop
. Both are still trading significantly below their earlier peaks.
    Currency bid prices at 2:34PM (1834 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change                   
 Dollar index                 90.5810        90.0740     +0.57%         0.667%        +90.6120    +89.9510
 Euro/Dollar                  $1.2099        $1.2176     -0.63%         -0.97%        +$1.2193    +$1.2093
 Dollar/Yen                   109.7350       109.3300    +0.38%         +6.22%        +109.8350   +109.3000
 Euro/Yen                     132.77         133.08      -0.23%         +4.61%        +133.4100   +132.6700
 Dollar/Swiss                 0.8992         0.8946      +0.49%         +1.61%        +0.9000     +0.8933
 Sterling/Dollar              $1.4098        $1.4176     -0.54%         +3.20%        +$1.4185    +$1.4095
 Dollar/Canadian              1.2172         1.2095      +0.65%         -4.41%        +1.2177     +1.2080
 Aussie/Dollar                $0.7697        $0.7753     -0.72%         +0.06%        +$0.7775    +$0.7689
 Euro/Swiss                   1.0880         1.0892      -0.11%         +0.68%        +1.0901     +1.0875
 Euro/Sterling                0.8579         0.8587      -0.09%         -4.01%        +0.8605     +0.8569
 NZ                           $0.7123        $0.7196     -1.01%         -0.81%        +$0.7210    +$0.7116
 Dollar/Norway                8.3475         8.2620      +1.08%         -2.75%        +8.3595     +8.2650
 Euro/Norway                  10.0985        10.0700     +0.28%         -3.52%        +10.1135    +10.0611
 Dollar/Sweden                8.3289         8.2484      +0.42%         +1.62%        +8.3351     +8.2368
 Euro/Sweden                  10.0783        10.0362     +0.42%         +0.02%        +10.0812    +10.0409
 (Additional reporting by Elizabeth Howcroft in London; Editing by Emelia Sithole-Matarise, Will Dunham and
Pravin Char)