* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (New throughout, adds analyst quote)
By Kate Duguid
NEW YORK, July 19 (Reuters) - The U.S. dollar rose inafternoon trade on Friday as fears of a larger-than-expected50-basis-point interest rate cut in July abated after the NewYork Federal Reserve walked back dovish comments from itspresident the prior day.
The dollar dropped before rebounding after a New York Fedrepresentative subsequently said Williams' comments were notabout immediate policy direction.
Williams has "reassured markets that his comments wereacademic and not about immediate policy changes and the dollarhas modestly recovered as a result," said Joshua Tadbir,corporate hedging manager at Western Union Business Solutions.
Investors are now pricing in a 24.5% chance of a 50-pointcut in U.S. rates later this month, according to CME Group'sFedWatch tool, easing off the 60.2% probability hit on Thursday.The dollar has held up reasonably well as investors bet othercentral banks also will ease policy.
The dollar remains sensitive to any Fed news "as traders arepositioned for at least three rate cuts by year-end, includingthe 25-basis point cut that is fully priced into the market thismonth. Should these probabilities change, as a result of the Fedpotentially indicating a one-and-done attitude this month, thenthe dollar could rapidly appreciate as the futures marketrepositions," said Tadbir.
The dollar index .DXY , which hit a two-week low of 96.648on Thursday, was 0.39% higher at 97.168.
The euro fell against the rebounding dollar on Friday andhit a two-year low versus the Swiss franc, as investors rampedup bets for a European Central Bank interest rate cut as earlyas next week.
Money markets are pricing in a roughly 55% chance of a10-basis point rate cut next week, versus a 40% chance earlierin the week, according to data from Refinitiv's Eikon. urn:newsml:reuters.com:*:nL8N24K28E
Not all analysts were convinced. Marvin Loh, senior globalmacro strategist at State Street Global Markets, said hebelieved the ECB would wait to cut rates until the Fed had doneso. What's more, he noted, the bank may wait on making anysignificant changes in policy until incoming ECB chief ChristineLagarde has been installed.
The euro was 0.51% lower at $1.122EUR= .
Against the Swiss franc it touched a two-year low of 1.102francs per euro EURCHF= , down 0.42% on the day. The franc,viewed as a safe haven, has benefited as investors grow nervousabout the euro zone economic outlook. (Reporting by Kate Duguid and Tommy Wilkes; Editing by DanGrebler and Jonathan Oatis) ((email@example.com; +646-223-6118; ReutersMessaging: firstname.lastname@example.org@thomsonreuters.net))