By Rae Wee
SINGAPORE, April 14 (Reuters) - The U.S. dollar
languished near a two-month low against major peers on Friday
while the euro flirted with a one-year peak, as traders ramped
up expectations of an imminent end to the U.S. Federal Reserve's
rate-hike cycle on signs of cooling inflation.
Data from the U.S. Labor Department on Thursday showed the
producer price index (PPI) fell by the most in nearly three
years last month, coming a day after inflation data pointed to
moderation in consumer prices.
The greenback took another leg down following Thursday's
data release, with the dollar index sinking to a
two-month low of 100.84 in the previous session.
It last stood at 100.95 in early Asian trade, and was headed
for a weekly decline of more than 1%, its steepest since
January.
Meanwhile, the euro rose 0.07% to $1.1055, after
surging to a one-year top of $1.1068 on Thursday.
The British pound was similarly perched near a
10-month high and last bought $1.2526.
"The easiest way to express a dollar negative view has been
with the euro," said Ray Attrill, head of FX strategy at
National Australia Bank.
"The significant downside surprise in U.S. PPI has made
people a bit more convinced of the view that the Fed will (soon)
be done ... and (strengthened) conviction that inflation will
allow the Fed to be cutting rates before the end of the year,"
said Attrill.
Money markets are pricing in a 69% chance the Fed will raise
interest rates by 25 basis points next month, though a series of
cuts are also being priced in from July through to the end of
the year, with rates seen just above 4.3% in December. Adding to the hope that global inflationary pressure is
waning was an unexpected surge in Chinese exports, which in
March shot up 14.8% from the same month a year earlier, stunning
economists who predicted a 7.0% fall in a Reuters poll.
The upbeat Chinese data, alongside a robust March employment
report in Australia, kept the Australian dollar supported at around $0.6788 on Friday, having surged 1.3% in the
previous session on the back of the data releases. The
Australian and New Zealand dollars are often used as liquid
proxies for China's yuan.
"It was almost like a perfect positive storm for the
Aussie," said Attrill. "Starting with the employment numbers ...
and the China trade numbers which looked exceptionally good.
"You layer on top of that, the dollar weakness from the data
last night and positive risk sentiment, and it was a (raft) of
good news for the Aussie."
The New Zealand dollar similarly gained 0.13% to
$0.6305 in Asia trade, after jumping 1.3% on Thursday.
Elsewhere in Asia, Japan's yen rose marginally to
132.44 per dollar, while the offshore yuan edged about
0.1% higher to 6.8635 per dollar.
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(Reporting by Rae Wee; Editing by Christopher Cushing)
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