June 12, 2019 / 1:42 PM / 7 days ago

FOREX-Dollar climbs after brief dip on weak consumer price gains

 (New throughout, updates trading and comments to U.S. market
open, new byline, changes dateline, previous LONDON)
    By Karen Brettell
    NEW YORK, June 12 (Reuters) - The U.S. dollar was modestly
higher on Wednesday as trade tensions and U.S. interest rate
policy remained in focus, after briefly weakening earlier on
data showing that U.S. consumer prices barely rose in May.
    The greenback has come under pressure as tepid inflation and
weakening economic data adds to bets that the Federal Reserve is
closer to cutting interest rates.
    Still, a sustained decline against the euro has not yet
emerged as the U.S. currency still benefits from relatively
higher rates than in Europe.
    “You still have a very large divergence between the Federal
Reserve and the European Central Bank, and that’s really what’s
precluding a sustained euro/dollar rally based on the
expectations of what the Fed’s going to do going forward,” said
Bipan Rai, North American head of FX strategy at CIBC Capital
Markets in Toronto. 
    The dollar dropped sharply on Wednesday after the Labor
Department said its consumer price index edged up 0.1% last
month. Excluding the volatile food and energy components, the
core CPI nudged up 0.1% for the fourth straight month.
    The decline was not sustained however, with the dollar index
against a basket of six major currencies last up 0.11%.
    Fed officials, including Chairman Jerome Powell, have sought
to explain low price pressures as being transitory.
    The Fed is not widely expected to cut rates when it meets on
June 18-19, though investors will be watching for any new
signals that a cut is getting nearer.
    Interest rate futures traders are now pricing in a 22%
chance of a cut in June, and an 85% likelihood of a cut in July.
    Low inflation is a concern for the Fed at the same time as
the U.S.-China trade war threatens to derail global economic
growth.
    Investors are also nervous that trade battles will spread to
Japan and Europe, with U.S. President Donald Trump on Tuesday
accusing Europe of devaluing the euro zone's single currency.
    "The Euro and other currencies are devalued against the
dollar, putting the U.S. at a big disadvantage," Trump tweeted.

    He also renewed his attack on the U.S. central bank, saying
that interest rates were too high.
    
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    Currency bid prices at 9:32AM (1332 GMT)
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change                 
                                              Session                                           
 Euro/Dollar      EUR=        $1.1312        $1.1329     -0.15%         -1.38%      +1.1343     +1.1311
 Dollar/Yen       JPY=        108.5000       108.5000    +0.00%         -1.60%      +108.5700   +108.2200
 Euro/Yen         EURJPY=     122.74         122.89      -0.12%         -2.76%      +122.9900   +122.6100
 Dollar/Swiss     CHF=        0.9949         0.9922      +0.27%         +1.38%      +0.9953     +0.9904
 Sterling/Dollar  GBP=        1.2736         1.2722      +0.11%         -0.16%      +1.2758     +1.2716
 Dollar/Canadian  CAD=        1.3291         1.3279      +0.09%         -2.54%      +1.3304     +1.3278
 Australian/Doll  AUD=        0.6944         0.6960      -0.23%         -1.49%      +0.6963     +0.6943
 ar                                                                                             
 Euro/Swiss       EURCHF=     1.1256         1.1240      +0.14%         +0.03%      +1.1264     +1.1226
 Euro/Sterling    EURGBP=     0.8881         0.8901      -0.22%         -1.14%      +0.8912     +0.8873
 NZ               NZD=        0.6577         0.6582      -0.08%         -2.08%      +0.6589     +0.6567
 Dollar/Dollar                                                                                  
 Dollar/Norway    NOK=        8.6394         8.6279      +0.13%         +0.01%      +8.6458     +8.6183
 Euro/Norway      EURNOK=     9.7729         9.7773      -0.05%         -1.34%      +9.7948     +9.7723
 Dollar/Sweden    SEK=        9.4403         9.4496      -0.25%         +5.32%      +9.4569     +9.4196
 Euro/Sweden      EURSEK=     10.6785        10.7050     -0.25%         +4.04%      +10.7173    +10.6760
 

 (Editing by Bernadette Baum)
  
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