* 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
(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 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 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 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 nudged up 0.1% to $0.6985, adding to the
previous day's modest gains.
The U.S. Treasury 10-year yield , 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
(Reporting by Shinichi Saoshiro Editing by Shri Navaratnam)
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