* Graphic: World FX rates in 2019
By Saikat Chatterjee
LONDON, June 12 (Reuters) - The dollar fell on Wednesday as rising
trade tensions between Washington and Beijing and growing bets on a
U.S. interest rate cut sapped investor demand for the currency.
Against a basket of other currencies , the dollar edged 0.1
percent lower to 96.64 and just above a two-and-a-half-month low of
96.46 reached last week.
The dollar has suffered a setback after the latest escalation of
the U.S.-China trade, which analysts fear could tip the global economy
Those fears have grown as recent data have pointed to a global
economic slowdown. Chinese factory inflation slowed in May and Fed
officials have become increasingly cautious. That has fuelled
expectations of U.S. rate cuts, a shift from a few months.
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.
"This is a perfect storm for the dollar, and that is also
undermining risk appetite broadly in the market," said Ricardo
Evangelista, a senior analyst at ActivTrades in London.
The dollar slipped as much as 0.2% against the pound
, taking its losses to nearly 1% so far this month.
It also weakened against the Hong Kong dollar , which rose
towards the midpoint of a daily trading range as bond auctions and
large listings in the local stock market sucked cash from the local
The local dollar also strengthened as the city was roiled by
violent protests against an extradition bill that would allow people
to be sent to mainland China.
The dollar's latest drop comes as U.S. President Donald Trump
accused the European Union of devaluing the euro zone's single
currency. He also renewed his attacks on the Fed and its monetary
That has raised concerns that the trade tensions between the
United States and the rest of the world will only intensify.
"The comments about the euro support our view that it’s not
just about China," Brown Brothers Harriman strategists said.
"Come November, auto tariffs will come back into focus with the
EU and Japan on the front lines."
Hong Kong interbank rates shoot higher USD valuations
(Reporting by Saikat Chatterjee; editing by Larry King)
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