News: FOREX-CPI miss keeps dollar below 2018 peak, sterling falls

• Dollar index holds below 2018 peak as CPI disappoints
• Euro benefits as dollar rally stalls
• Bank of England leaves rates alone, cuts growth outlook
• Malaysian ringgit slides in offshore trade after election

(Updates market action, adds quote)

The U.S. dollar fell on Thursday against a basket of currencies, holding below its 2018 peak, as a smaller-than-expected rise in consumer prices caused traders to pare positions betting that inflation is accelerating, which could push the Federal Reserve to hike interest rates faster.

The British pound GBP=D3 hit a four-month low versus the greenback after the Bank of England left key borrowing costs unchanged but reduced its growth and inflation outlook for 2018 and 2019.

The recent softening in price growth among major economies has lowered expectations that most central banks other than the Fed will reduce their bond purchases or raise interest rates.

"Most central banks with the exception of the Fed had been more hawkish than they needed to be. They now seem to be walking back," said Michael Diaz, head of FX at XE in Buena Park, California.

The U.S. Consumer Price Index, the government's broadest inflation gauge, increased 0.2 percent in April, less than the 0.3 percent rise projected by economists polled by Reuters.

"With the disappointment of the latest CPI, it does knock the wind out of the dollar for a bit," said Mazen Issa, senior FX strategist at TD Securities in London.

Lower U.S. Treasury yields added pressure on the greenback which had rallied for over two weeks on traders exiting their bearish bets on signs of overseas growth, in particular in Europe, cooling more quickly than the United States.

The dollar index .DXY fell 0.4 percent against a basket of six major currencies at 92.680 after hitting a 4-1/2-month high of 93.42 on Wednesday.

Benchmark 10-year Treasury yield US10YT=RR was down over 2 basis points at 2.971 percent following the mildly disappointing U.S. CPI data and solid demand at $17 billion auction of 30-year government bonds.

The euro benefited the most on the dollar's pullback, posting a 0.6 percent gain at $1.1920 EUR= , while the dollar slipped 0.3 percent to 109.37 yen JPY= .

The British pound was down 0.2 percent at $1.3516 GBP=D3 after falling to $1.3460, the lowest level since Jan. 11 after the latest BOE statement.

Among Asian currencies, the Malaysian ringgit lost 4 percent in offshore trading MYR1MNDFOR= MYR3MNFOR= MYR= following the stunning victory of the opposition Pakatan Harapan (PH) coalition.

Malaysian financial markets were shut on Thursday and Friday.

PH's pledge to repeal an unpopular goods and services tax, restore a petrol subsidy and increase minimum wages raised concerns how the incoming government would pay for these programs and its potential drag on the ringgit.

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	Currency bid prices at 3:01PM (1901 GMT) 

 Description	  RIC		 Last		   U.S. Close  Pct Change	 YTD Pct	 High Bid	Low Bid 
											  Previous				   Change				  
											  Session											
 Euro/Dollar	  EUR=		$1.1925		$1.1850	 +0.63%		 -0.59%	  +1.1946	 +1.1844 
 Dollar/Yen	   JPY=		109.3600	   109.7400	-0.35%		 -2.94%	  +110.0100   +109.3200 
 Euro/Yen		 EURJPY=	 130.43		 130.04	  +0.30%		 -3.51%	  +130.7500   +130.0000 
 Dollar/Swiss	 CHF=		1.0022		 1.0050	  -0.28%		 +2.86%	  +1.0057	 +0.9995 
 Sterling/Dollar  GBP=		1.3517		 1.3544	  -0.20%		 +0.04%	  +1.3617	 +1.3461 
 Dollar/Canadian  CAD=		1.2755		 1.2853	  -0.76%		 +1.42%	  +1.2859	 +1.2743 
 Australian/Doll  AUD=		0.7537		 0.7462	  +1.01%		 -3.38%	  +0.7539	 +0.7451 
 ar																							  

 Euro/Swiss	   EURCHF=	 1.1954		 1.1914	  +0.34%		 +2.27%	  +1.1957	 +1.1900 
 Euro/Sterling	EURGBP=	 0.8820		 0.8748	  +0.82%		 -0.71%	  +0.8837	 +0.8729 
 NZ Dollar/Dolar  NZD=		0.6964		 0.6984	  -0.29%		 -1.72%	  +0.6985	 +0.6904 
 Dollar/Norway	NOK=		7.9952		 8.0742	  -0.98%		 -2.58%	  +8.0825	 +7.9818 
 Euro/Norway	  EURNOK=	 9.5373		 9.5726	  -0.37%		 -3.16%	  +9.5775	 +9.5223 
 Dollar/Sweden	SEK=		8.6412		 8.7027	  -0.09%		 +5.36%	  +8.7118	 +8.6136 
 Euro/Sweden	  EURSEK=	 10.3080		10.3170	 -0.09%		 +4.77%	  +10.3275	+10.2710 
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World FX rates in 2018	http://tmsnrt.rs/2egbfVh 

Malaysia's election shock http//reut.rs/2rx4vGO Korean won vs dollar index http//reut.rs/2wC2tuj

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