* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Saikat Chatterjee
LONDON, June 12 (Reuters) - The dollar fell on Wednesday asrising trade tensions between Washington and Beijing and growingbets on a U.S. interest rate cut sapped investor demand for thecurrency.
Against a basket of other currencies .DXY , the dollaredged 0.1 percent lower to 96.64 and just above atwo-and-a-half-month low of 96.46 reached last week.
The dollar has suffered a setback after the latestescalation of the U.S.-China trade, which analysts fear couldtip the global economy into recession.
Those fears have grown as recent data have pointed to aglobal economic slowdown. Chinese factory inflation slowed inMay urn:newsml:reuters.com:*:nL4N23H1U6 and Fed officials have become increasinglycautious. That has fuelled expectations of U.S. rate cuts, ashift 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 alsoundermining risk appetite broadly in the market," said RicardoEvangelista, a senior analyst at ActivTrades in London.
The dollar slipped as much as 0.2% against the pound GBP=D3 , taking its losses to nearly 1% so far this month.
It also weakened against the Hong Kong dollar HKD=D3 ,which rose towards the midpoint of a daily trading range as bondauctions and large listings in the local stock market suckedcash from the local market. urn:newsml:reuters.com:*:nZZN2NLP00
The local dollar also strengthened as the city was roiled byviolent protests against an extradition bill that would allowpeople to be sent to mainland China. urn:newsml:reuters.com:*:nL4N23J1XC
The dollar's latest drop comes as U.S. President DonaldTrump accused the European Union of devaluing the euro zone'ssingle currency. He also renewed his attacks on the Fed and itsmonetary policy urn:newsml:reuters.com:*:nL2N23I0D0
That has raised concerns that the trade tensions between theUnited States and the rest of the world will only intensify.
"The comments about the euro support our view that it's notjust about China," Brown Brothers Harriman strategists said."Come November, auto tariffs will come back into focus with theEU and Japan on the front lines."
Hong Kong interbank rates shoot higher https://tmsnrt.rs/2R9DCo2
USD valuations https://tmsnrt.rs/2X7Y2TQ
(Reporting by Saikat Chatterjee; editing by Larry King) ((firstname.lastname@example.org
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