(Adds Trump comments, sterling move, updates prices)
By Karen Brettell
NEW YORK, June 12 (Reuters) - The U.S. dollar gained on
Wednesday as trade tensions and U.S. interest rate policy
remained in focus after President Donald Trump expressed
optimism over making a trade deal with China.
The greenback has come under pressure recently as the
U.S.-China trade war threatens to derail global economic growth,
adding to bets that the Federal Reserve is closer to cutting
interest rates.
A sustained decline against the euro has not yet emerged,
however, 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 that's really what's
precluding a sustained euro/dollar rally based on the
expectations of what the Fed's going to do going forward," said
Bipan Rai, North American head of FX strategy at CIBC Capital
Markets in Toronto.
The dollar was boosted on Wednesday after Trump said that he
had a "feeling" that a U.S.-China trade deal could be reached,
though he again threatened to increase tariffs on Chinese goods
if no agreement is reached. The euro dropped as Trump said he was considering sanctions
over Russia's Nord Stream 2 natural gas pipeline project and
warned Germany against being dependent on Russia for energy.
The dollar briefly fell earlier on Wednesday after the U.S.
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 next major economic indicator will be Friday's retail
sales data for May.
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 21%
chance of a cut in June and an 85% likelihood of at least one
cut in July.
Investors are also nervous that trade battles will spread to
Japan and Europe, with 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 wrote on
Twitter. Sterling also dropped on Wednesday after British lawmakers
defeated an attempt led by the opposition Labour Party to try to
block a no-deal Brexit by seizing control of the parliamentary
agenda from the government. Currency bid prices at 1:37PM (1737 GMT)
Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid
Previous Change
Session
Euro/Dollar EUR= $1.1291 $1.1329 -0.34% -1.55% +1.1343 +1.1290
Dollar/Yen JPY= 108.4700 108.5000 -0.03% -1.62% +108.5700 +108.2200
Euro/Yen EURJPY= 122.50 122.89 -0.32% -2.95% +122.9900 +122.5200
Dollar/Swiss CHF= 0.9949 0.9922 +0.27% +1.38% +0.9957 +0.9904
Sterling/Dollar GBP= 1.2685 1.2722 -0.29% -0.56% +1.2758 +1.2682
Dollar/Canadian CAD= 1.3315 1.3279 +0.27% -2.36% +1.3320 +1.3273
Australian/Doll AUD= 0.6931 0.6960 -0.42% -1.67% +0.6963 +0.6931
ar
Euro/Swiss EURCHF= 1.1236 1.1240 -0.04% -0.16% +1.1264 +1.1226
Euro/Sterling EURGBP= 0.8899 0.8901 -0.02% -0.95% +0.8916 +0.8873
NZ NZD= 0.6572 0.6582 -0.15% -2.16% +0.6592 +0.6567
Dollar/Dollar
Dollar/Norway NOK= 8.6540 8.6279 +0.30% +0.18% +8.6587 +8.6183
Euro/Norway EURNOK= 9.7737 9.7773 -0.04% -1.34% +9.7948 +9.7667
Dollar/Sweden SEK= 9.4666 9.4496 -0.11% +5.61% +9.4764 +9.4196
Euro/Sweden EURSEK= 10.6930 10.7050 -0.11% +4.18% +10.7173 +10.6760
(Editing by Bernadette Baum and Will Dunham)