* Consumer price index unchanged in June
* Traders lower view on U.S. rate hike by year-end
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh (Updates with U.S. market open; changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, July 14 (Reuters) - The dollar extended its earlier decline against a basket of major currencies on Friday, after weaker-than-forecast data on consumer prices and retail sales in June raised doubts about U.S. economic growth and whether the Federal Reserve would raise interest rates again in 2017.
U.S. consumer prices were unchanged in June and retail sales fell for a second straight month, pointing to tame inflation.
Economists had forecast the CPI edging up 0.1 percent last month and its drop of 0.1 percent in May and the lack of a rebound in June could trouble Fed officials who have largely viewed the recent moderation in price pressures as transitory.
"The CPI data begs the question, at what point does transitory becomes something that is more sustained, in terms of the softness," said Richard Franulovich, senior currency strategist at Westpac Banking Corp in New York.
The dollar index, which tracks the greenback against six major rivals, was down 0.5 to 95.248 after earlier falling to 95.186, its lowest since September 2016.
"This cements the weaker trend in the dollar and lower U.S. yields and I think this story has got legs," he said.
U.S. interest rates futures rose as traders pared their view the Federal Reserve would increase rates again in 2017 to less than
"Economic surprises continue to tilt toward the downside in the world's largest economy, suggesting that the Federal Reserve's hawkish stance earlier in the year could once again prove ill-founded," Karl Schamotta, director of global product and market strategy at Cambridge Global Payments in Toronto, said in a note.
The U.S. dollar remained broadly on the back foot against major currencies.
Against the Japanese yen, the greenback was down 0.62 percent to 112.57 yen, after hitting a near two-week low of 112.28 yen.
"Dollar-yen has got a lot more downside and it could easily go to 110 yen before the summer is out, in fact the next few weeks, especially with U.S. yields heading lower," Franulovich said.
The Australian dollar hit a near 15-month high as risk appetite was robust with global stock markets hitting record highs and after dovish comments from global policymakers.
The Aussie was 1.13 percent higher against the greenback at $0.7813.
The euro was up 0.37 percent against the greenback to $1.1437 and sterling was 1.07 percent higher at $1.3073, after hitting $1.3082, its highest since September 23, 2016.
Editing by Chizu Nomiyama