FOREX-Dollar steadies as strong U.S. inflation curbs chance of aggressive Fed rate cut

* Dollar regroups after losing ground on dovish Fed chair
views
* Strong U.S. CPI data tempers prospect of 50 bps Fed rate
cut
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Adds details and quotes, updates prices)
By Shinichi Saoshiro
TOKYO, July 12 (Reuters) - The dollar was steady on Friday,
having regained some traction against its peers after
stronger-than-expected U.S. inflation data tempered the prospect
of an aggressive Federal Reserve interest rate cut later this
month.
The core U.S. consumer price index excluding food and energy
components rose 0.3% in June, the largest increase since January
2018, data on Thursday showed. The signs of a pick-up in underlying inflation, along with
separate data on weekly jobless claims showing the labour market
remained solid, curbed financial market expectations of a more
aggressive 50 basis point cut at the Fed's July 30-31 meeting.
Markets are still fully priced for a quarter percentage
point cut as U.S. policymakers seek to support a slowing
economy.
The dollar was little changed at 108.390 yen JPY= after
rebounding from a low of 107.860 plumbed on Thursday in response
to dovish comments from Fed Chairman Jerome Powell, which had
revived the chance of a 50 basis-point cut.
"The dollar bounced back as the strong U.S. CPI got the
market to question the Fed's view on prices and whether
inflation was really as weak as projected," said Takuya Kanda,
general manager at Gaitame.Com Research Institute.
"Expectations for a 50 basis point cut had risen after
Powell's comments but were lowered again by the CPI. Until the
Fed's meeting later this month, the prospect of a 50 basis point
cut will continue ebbing back and forth on each major data
release."
The dollar index .DXY against a basket of six major
currencies stood little changed at 96.972 after retracing much
of its losses on Thursday, when it had briefly stooped to a
six-day low of 96.795.
The index hit the low after Powell said in a midweek
congressional testimony that the Fed was ready to "act as
appropriate," given the U.S. economy was still under threat from
disappointing factory activity, tame inflation and a simmering
Sino-U.S. trade war.
Comments by Chicago Fed President Charles Evans scheduled
later on Friday and New York Fed President John Williams due on
Monday will provide a chance to gauge how dovish the central
bank really is, said Masafumi Yamamoto, chief forex strategist
at Mizuho Securities.
"If these Fed officials are not as dovish as Powell, and if
the New York Fed's manufacturing survey on Monday prove stronger
than forecast, they could show that the dollar weakening in
response to Powell's congressional testimony was overdone."
The euro EUR= was a shade stronger at $1.1264 but off a
high of $1.1285 scaled on Thursday prior to the U.S. inflation
data.
The Australian dollar AUD=D4 nudged up 0.1% to $0.6985,
adding to the previous day's modest gains.
The U.S. Treasury 10-year yield US10YT=RR , which often
dictates the direction of the dollar, was at 2.125% after
jumping 8 basis points overnight on the strong U.S. inflation
data and a weak 30-year bond auction.