TOKYO, May 11 Reuters The dollar rose on Thursday as the Chinese yuan dipped to a twomonth low after more evidence of weakness in China39;s postCOVID recovery clouded the outlook for the global economy.

Sterling edged lower ahead of a key Bank of England meeting, with traders expecting a small hike and looking for signs of further rises in the months ahead.

After sliding on the back of slowing U.S. inflation, which bolstered confidence that the Federal Reserve was done hiking interest rates, the dollar rose against the euro and other major currencies following the release of Chinese data showing consumer inflation almost flatlined last month.

The slowing Chinese inflation, suggesting more stimulus may be needed to boost a patchy postCOVID economic recovery, came on the foot of data earlier in the week showing an unexpected decline in imports.

The onshore yuan slipped as low as 6.9427 per dollar, a level last seen on March 10.

The dollar index measuring the greenback against a basket of six major peers including euro and sterling, rose 0.45 to 101.87.

The market is trying to assess which economy is going to slow down quicker, and is undecided how to read the latest data, said Rodrigo Catril, senior FX strategist at National Australia Bank.

U.S. CPI was encouraging, and should be dollar negative, but China CPI is a reminder of the ongoing issues there.

Money market traders currently lay odds of 5 on a quarter point hike in June, and a 95 probability of a pause….