(Updates rates at 1055 GMT)

By Alun John and Anna Pruchnicka

LONDON, April 11 (Reuters) - The dollar traded at its

highest since November against a basket of major currencies on

Thursday, after hotter-than-expected U.S. inflation data a day

earlier squashed expectations of an interest rate cut in June,

leaving the yen at a 34-year low.

Investor focus will now be on U.S. producer price data and

the European Central Bank's policy meeting later in the day, for

indications about whether the Federal Reserve and ECB policies

will start to diverge later this year.

The euro was down 0.13% at $1.07267, following

Wednesday's 1% fall on the U.S. data. The pound traded

flat at $1.2534 after a 1.1% fall a day earlier.

Any change in ECB rates would come as a major surprise to

markets, but the focus is on what president Christine Lagarde

says about the pace of cuts. Policymakers offered multiple hints

in recent weeks, some quite explicit, that the central bank will

start cuts at its June meeting.

The ECB announces its rate decision at 1415 CET (1215 GMT)

The outlook for the ECB and for other central banks has been

complicated by U.S. inflation data, which caused markets to push

back significantly their expectations of Fed rate cuts, said

Simon Harvey, head of FX analysis at Monex Europe.

"The ECB will likely try to be as non-committal as possible

about their path after June at today's meeting," he said, adding

that the economic situation in Europe meant the central bank

would have to cut more than its U.S. counterpart in the coming

months, which would send the euro lower.

The yen was at 153.26 per dollar, flat on the day,

but at its weakest since 1990 again after a bruising Wednesday

which saw the dollar climb nearly 1% against the Japanese

currency.

That left the dollar index a touch higher on Thursday

at 105.26, its highest since November.

Markets are now pricing in a 17% chance of the Fed cutting

rates in June, compared with 50% before the CPI data, according

to CME FedWatch tool, with September turning out to be the next

starting point for rate cuts.

Traders are also pricing in 43 basis points of Fed cuts this

year, far less than the 75 basis points of easing projected by

the U.S. central bank. At the start of the year, traders had

priced in over 150 bps of cuts in 2024.

U.S. producer price inflation data later on Thursday could

shape those expectations further, as it will give clues about

what to expect from personal consumption inflation data, due

later in the month, the Fed's preferred gauge of inflation.

The Canadian dollar hit its weakest since November at C$

1.3702 per U.S. dollar on Wednesday, after the U.S. CPI data and

after the Bank of Canada left rates steady but said a June cut

was possible.

YEN WATCH

The yen's slide has brought intervention fears back as

authorities in Tokyo reiterated they would not rule out any

steps to deal with excessive swings.

Japan intervened in the currency market three times in 2022

as the yen slid toward what was then a 32-year low of 152 to the

dollar.

"These warnings from Tokyo will quickly start to sound

hollow and hence for credibility purposes alone, we maintain

that intervention looks imminent," said MUFG analysts in a note.

"It may require one further sharp jump toward 155.00 (for

dollar/yen) to justify it more clearly given the fact that the

moves to date certainly are more modest than in 2022 when

intervention took place."

The yen is down nearly 8% against the dollar this year, with

the currency rooted near 151-per-dollar levels since the Bank of

Japan last month ended eight years of negative interest rates.

Low Japanese rates have made the yen the funding currency of

choice for carry trades for years, in which traders typically

borrow a low-yielding currency to then sell and invest the

proceeds in assets denominated in a higher-yielding one.

Bank of Japan Governor Kazuo Ueda said on Wednesday the

central bank would not directly respond to currency moves in

setting monetary policy, brushing aside market speculation that

the yen's sharp falls could force it to raise interest rates.