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FOREX-Dollar slips as global growth worries fester

    (Updates with fresh prices, Powell remarks)
    By Herbert Lash and Joice Alves
    NEW YORK/LONDON, June 22 (Reuters) - The dollar eased
against the euro and yen on Wednesday as concerns mounted that
interest rate hikes by major central banks to contain inflation
run the risk of inducing a sharp global slowdown or recession.
    British consumer price inflation hit a new 40-year high at
9.1% in May, while annual Canadian inflation surged to 7.7% last
month to the highest rate since January 1983, in the latest data
to show consumer prices running hotter than expected.

    Sterling initially lost almost 1% as it fell to a near
one-week low of $1.2162, but it later pared losses. The Canadian
dollar slid against the U.S. currency, but it remained below the
1.30 level it breeched last Friday and on Monday.
    Market players are torn between recognizing that central
banks are tightening financial conditions more aggressively than
expected a month ago or two months ago and concern about what
the economic fallout is going to be, said Marc Chandler, chief
market strategist at Bannockburn Global Forex.
    "Sentiment is fickle partly because we're unsure when
inflation will peak," Chandler said. "Everything is being driven
by inflation, inflation expectations and central bank policy."
    The Federal Reserve is "strongly committed" to bringing down
inflation and policymakers are acting "expeditiously to do so,"
U.S. central bank chief Jerome Powell said in prepared remarks
for a hearing before the U.S. Senate Banking Committee.

    "Inflation has obviously surprised to the upside and further
surprises could be in store," Powell said in the remarks.
    The dollar index fell 0.201%, with the euro up
0.32% to $1.0559. The Japanese yen strengthened 0.53% to 135.89
per dollar, while sterling was last 0.06% lower at
$1.2265.
    The safe-haven dollar has been gaining ground on most peers.
The yen hit a fresh 24-year low as rising U.S. and European bond
yields contrasted with low Japanese interest rates.
    "Recession fears are growing as central bankers slow demand
to curb inflation. Pro-cyclical currencies are on the back foot
and the dollar remains very much in demand," said Chris Turner,
global head of markets at ING.
    Analysts see no immediate end to a sell-off that has seen
the yen weaken 18% this year from 115.08 at the end of 2021.
    The currency has been weakening as higher energy prices put
pressure on Japan's current account and because of the ever-
widening gap between yields on Japanese government bonds and
U.S. Treasuries.
    The Bank of Japan last week maintained ultra-low interest
rates and vowed to defend its policy of yield curve control
(YCC), which effectively caps the yield on the 10-year Japanese
government bond at 0.25%.
    "Dollar/yen is continuing to trade on the Treasury yields,
which have been stable but with the 10-year staying above the
3.20% level while the Bank of Japan has done a lot to defend
YCC," said Redmond Wong, market strategist at Saxo Markets Hong
Kong.

    Currency bid prices at 10:09 AM (1409 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct       High Bid    Low Bid
                                              Previous                   Change
                                              Session
 Dollar index                 104.1700       104.4300    -0.24%         8.893%        +104.9500   +104.1100
 Euro/Dollar                  $1.0563        $1.0535     +0.27%         -7.09%        +$1.0570    +$1.0470
 Dollar/Yen                   135.8350       136.6900    -0.61%         +18.01%       +136.7100   +135.6800
 Euro/Yen                     143.47         143.94      -0.33%         +10.09%       +144.0100   +142.6800
 Dollar/Swiss                 0.9609         0.9666      -0.59%         +5.34%        +0.9689     +0.9600
 Sterling/Dollar              $1.2269        $1.2279     -0.06%         -9.27%        +$1.2302    +$1.2163
 Dollar/Canadian              1.2953         1.2917      +0.30%         +2.47%        +1.2996     +1.2915
 Aussie/Dollar                $0.6930        $0.6974     -0.62%         -4.66%        +$0.6972    +$0.6882
 Euro/Swiss                   1.0150         1.0175      -0.25%         -2.11%        +1.0178     +1.0133
 Euro/Sterling                0.8606         0.8582      +0.28%         +2.45%        +0.8623     +0.8575
 NZ                           $0.6289        $0.6330     -0.63%         -8.11%        +$0.6331    +$0.6244
 Dollar/Dollar
 Dollar/Norway                9.9350         9.8435      +1.00%         +12.85%       +9.9970     +9.8800
 Euro/Norway                  10.4962        10.3647     +1.27%         +4.83%        +10.5210    +10.3648
 Dollar/Sweden                10.1010        10.1004     +0.33%         +12.01%       +10.1927    +10.0965
 Euro/Sweden                  10.6719        10.6371     +0.33%         +4.28%        +10.6915    +10.6400



 (Reporting by Herbert Lash, additional reporting by Joice Alves
and Alun John;
Editing by Muralikumar Anantharaman, Mark Potter and Emelia
Sithole-Matarise)

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