FOREX-Dollar subdued, on course for weekly gain before Fed meeting

* Dollar set for 0.5% rise this week
* Yen up 0.1%, Aussie off 0.3%
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

By Daniel Leussink
TOKYO, June 14 (Reuters) - The dollar trod water on Friday
and was set to show a weekly rise as investor focus turned to
next week's Federal Reserve meeting for hints on a possible rate
cut in light of rising risks to trade and global growth.
The dollar index against a basket of six rivals was largely
unchanged at 97.029 .DXY , and on track for a half-percent gain
this week. The index had touched an 11-week low of 96.459 last
Friday.
The Federal Open Market Committee's (FOMC) two-day policy
meeting is set to begin on Tuesday. With trade tensions rising,
U.S. growth slowing and hiring in May declining, markets have
priced in at least two rate cuts by the end of 2019.
There was only a 13.4% expectation on Thursday that U.S.
interest rates will be at current levels in July of this year,
compared to 74.1% a month ago, according to the CME Group's
FedWatch tool.
"Ahead of the FOMC meeting, people are expecting dovish
comments from the Fed, which is weighing on the dollar in
general," said Masafumi Yamamoto, chief currency strategist at
Mizuho Securities.
"However, other currencies like euro and sterling are weak
and their weakness is helping the strength of the dollar," he
said.
Investors' attention on Friday will also be on U.S. retail
sales data due later in the global day for insights into the
state of domestic demand in the world's biggest economy.
Market participants were also keeping a close eye on
geopolitical issues including the months-long Sino-U.S. trade
conflict and U.S.-Iran tensions following Thursday's attacks on
tankers in the Gulf of Oman. Washington quickly blamed Iran for
the attacks, but Tehran denied it was responsible. Geopolitical risks have risen to the fore quite strongly,
said Bart Wakabayashi, Tokyo branch manager at State Street
Bank.
"The anticipation was for a relatively quick, undisruptive
resolution to the trade situation with China. Obviously, that
hasn't happened," said Wakabayashi.
The greenback dipped 0.1% to 108.30 yen JPY= .
The Japanese currency showed little reaction to the latest
round of trade negotiations between Tokyo and Washington on
Thursday.
Japan and the United States deepened their understanding
over each other's position on trade and will continue
discussions, Japan's economy minister Toshimitsu Motegi said
after meeting with U.S. Trade Representative Robert
Lighthizer. Motegi said the two would probably meet again ahead of the
G20 summit meeting in Osaka, Japan late this month.
The Australian dollar AUD=D4 slipped as investors bet that
aggressive rate cuts would be needed to support the economy in
the wake of soft domestic data and the fallout from the
U.S.-China trade standoff globally.
"The perception of an Aussie rate cut is gaining steam,"
said Wakabayashi.
The Aussie was last down 0.3% at $0.6896, and on course for
a loss of about 1.5% for the week.
Elsewhere, the euro EUR= edged up 0.02% to $1.1279,
holding up after falling during the past two sessions, though it
was still set for a weekly loss of about 0.5%.
Oil fell on Friday after sharp gains in the previous session
when prices were boosted following the attacks on two tankers
near Iran and the Strait of Hormuz, a key passage for seaborne
oil cargoes. O/R
Mizuho's Yamamoto said rising oil prices could create a drag
on the dollar, adding that higher crude prices were not
necessarily bad for the global economy.

(Editing by Simon Cameron-Moore & Shri Navaratnam)