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(New throughout, updates trading and comments to U.S. market open, new byline, changes dateline, previous LONDON) 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 thats really whats precluding a sustained euro/dollar rally based on the expectations of what the Feds 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.
Currency bid prices at 9:32AM (1332 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low BidPrevious Change
Euro/Dollar EUR= $1.1312 $1.1329 -0.15% -1.38%+1.1343 +1.1311Dollar/Yen JPY= 108.5000 108.5000 +0.00% -1.60%+108.5700 +108.2200Euro/Yen EURJPY= 122.74 122.89 -0.12% -2.76%+122.9900 +122.6100Dollar/Swiss CHF= 0.9949 0.9922 +0.27% +1.38%+0.9953 +0.9904Sterling/Dollar GBP= 1.2736 1.2722 +0.11% -0.16%+1.2758 +1.2716Dollar/Canadian CAD= 1.3291 1.3279 +0.09% -2.54%+1.3304 +1.3278Australian/Doll AUD= 0.6944 0.6960 -0.23% -1.49%+0.6963 +0.6943
Euro/Swiss EURCHF= 1.1256 1.1240 +0.14% +0.03%+1.1264 +1.1226Euro/Sterling EURGBP= 0.8881 0.8901 -0.22% -1.14%+0.8912 +0.8873NZ NZD= 0.6577 0.6582 -0.08% -2.08%+0.6589 +0.6567
Dollar/Norway NOK= 8.6394 8.6279 +0.13% +0.01%+8.6458 +8.6183Euro/Norway EURNOK= 9.7729 9.7773 -0.05% -1.34%+9.7948 +9.7723Dollar/Sweden SEK= 9.4403 9.4496 -0.25% +5.32%+9.4569 +9.4196Euro/Sweden EURSEK= 10.6785 10.7050 -0.25% +4.04%+10.7173 +10.6760
(Editing by Bernadette Baum)