FOREX-Dollar slips for 2nd day on growing U.S. rate cut bets

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Saikat Chatterjee
LONDON, June 12 (Reuters) - The dollar edged lower for a
second consecutive day on Wednesday on growing expectations of a
U.S. rate cut next week while high-yielding currencies suffered
due to ongoing trade tensions.
Against a basket of its rivals .DXY , the dollar edged 0.1
percent lower to 96.64 and just above a 2-1/2 month low of 96.46
hit last week.
Trade differences between the world's two biggest economies
are starting to reflect in data with Chinese factory inflation
slowing in May while recent comments by Fed officials have
become increasingly cautious. "The prospect of an unending trade dispute between the
world's two largest economies is a nightmare scenario and,
despite their respective government officials' comments, both
the US and China are seeing a steady deceleration in their
domestic growth," said Konstantinos Anthis, Dubai-based head of
research at ADSS.
Those concerns have also undermined appetite for risky
currencies with the Australian dollar weakening 0.3% versus the
Swiss franc AUDCHF=EBS and the perceived safe-haven Japanese
yen JPY=EBS rising 0.2% against the dollar.
A Fed watch tool by CME assigns a 18% probability of a U.S.
rate cut next week and a 68% probability of a cut in July.
Rising rate cut bets have also been helped by easing
inflation pressures with underlying price pressures remaining
muted. Core CPI inflation is expected to print at
1.9% in May compared to 2% in April.
"We do not expect today's CPI report to challenge the Fed's
view that inflation is currently 'subdued'," MUFG strategists
said in a daily note.
The euro EUR=EBS was broadly steady at $1.1360 and in
close reach of a three-month peak of $1.1348 scaled on Friday.
The single currency was little affected by U.S. President
Donald Trump's accusation that Europe was devaluing the euro,
which has gained roughly 1.4% against the dollar so far in June.