By Joice Alves
LONDON, Aug 19 (Reuters) - The euro and sterling slipped to a one-month low versus the safe-haven U.S. dollar on Friday with investors worrying about further economic slowdown after Federal Reserve officials reiterated the need for higher rates.
The dollar index rose 0.2% to 107.69, after earlier touching 107.74, its highest since July 18. The gauge is on track for a 1.9% rally this week, which would be its best weekly performance in ten weeks.
The euro was flat at $1.0084, after touching its lowest since July 15. Sterling sank 0.4% to a one-month low of $1.1882.
St. Louis Fed President James Bullard said he is leaning toward supporting a third straight 75-basis-point interest rate hike in September, while San Francisco Fed colleague Mary Daly said hiking rates by 50 or 75 basis points next month would be "reasonable."
Kansas City Fed President Esther George said she and her colleagues will not stop tightening policy until they are "completely convinced" that overheated inflation is coming down.
"The U.S. dollar is again on the front foot this morning supported by another round of hawkish Fed speak... the overall tone of Fed officials suggests that the Fed still has a lot of work to do to contain inflation," said Jane Foley, head of FX strategy at Rabobank in London.
Weakening Chinese data this week and an energy crisis in Europe are raising fears of further economic slowdown, which also hit European currencies and supported safe-haven flows, Foley added. "We expect another break below parity," she said.
The euro is on course to decline 1.7% since last Friday, which would be its worst week since July 8. Sterling is on track for its worst week in more than a year, set for a 2% drop.
British consumer sentiment in August fell to its lowest since at least 1974, a survey showed, as households feel "a sense of exasperation" about the soaring costs, as inflation hit double digits.
European Central Bank board member Isabel Schnabel fueled inflation worries by saying consumer prices could still accelerate in the short-term.
Interestingly, despite the Fed chorus on the need for higher rates, the odds of another supersized 75 basis point hike next month have receded to 45% in money markets.
Fed Chair Jerome Powell will update the market on his views at the annual Jackson Hole symposium on Aug. 25-27.
Against Asian currencies, the greenback rose to 136.76 yen , its highest since July 27. China's yuan slipped to a three-month low of 6.8150 per dollar in onshore trading after the central bank set a much-weakened midpoint guidance, with traders expecting further downside due to an economic slowdown.
"The USD/CNY fix today above 6.80 was the highest this year and suggests that the PBOC will not cap its gains in the face of the climbing USD," said Alvin Tan, a strategist at RBC Capital Markets.
In cryptocurrencies, bitcoin fell 7% to $21,793. Ether was down 5.8% to $1,737.
(Reporting by Joice Alves, additional reporting by Kevin Buckland Editing by Shri Navaratnam)