(Updates prices, adds comments; changes byline, dateline, pvs
LONDON)
* Dollar gains vs yen, hits 110.45 yen
* Euro hovers near Tuesday's roughly 10-week low of $1.1129
* Dollar slips vs Canadian dollar after Bank of Canada
decision
By Sam Forgione
NEW YORK, May 25 (Reuters) - The U.S. dollar rose against
the yen for a second straight day and hovered near its highest
level in roughly 10 weeks against the euro on Wednesday on
expectations for a Federal Reserve rate hike in the near term.
The dollar was last up 0.31 percent against the yen at
110.32 yen, near a session high of 110.45 yen, as traders
continued to anticipate a potential June or July Fed rate
increase. The euro was last mostly flat against the dollar after
dipping slightly to match Tuesday's roughly 10-week low of
$1.1129.
Fed funds futures contracts implied traders expected a 38
percent chance of a rate hike in June, up from a 34 percent
chance on Tuesday, according to CME Group's (NASDAQ:CME) FedWatch program.
Investors' expectations for a Fed rate hike have risen since
last week's minutes from the central bank's April meeting
signaled a June increase was firmly on the table, while hawkish
remarks from Fed officials this week and some stronger U.S.
economic data also ratcheted up bets.
Traders were awaiting comments from Fed Chair Janet Yellen
on Friday. Rate increases are expected to boost the dollar by
driving investment flows into the United States.
"Investors have started to seriously contemplate the
prospect of a hike at the start of the summer," said Luke
Bartholomew, global macro investment manager at Aberdeen in
London.
Greece's debt relief was perceived as a positive for the
euro, said Sebastien Galy, currency strategist at Deutsche Bank (DE:DBKGn)
in New York. The Eurogroup ministers gave a nod to releasing
10.3 billion euros ($11.48 billion) in new funds for Greece in
recognition of painful fiscal reforms pushed through by Prime
Minister Alexis Tsipras' leftist-led coalition.
The dollar hit a six-day low against the Canadian dollar of
C$1.3052 after the Bank of Canada kept interest rates on hold on
Wednesday. The bank said the economy would shrink in the second
quarter as a result of damage from recent wildfires in Alberta
before rebounding later in the year.
The dollar index, which measures the greenback against a
basket of six major currencies, was flat at 95.585, near a more
than eight-week high of 95.661 hit earlier .DXY .
The dollar was last mostly flat against the Swiss franc at
0.9926 franc, not far from a nearly 11-week high of 0.9940 franc
CHF= touched earlier.