By Rae Wee
SINGAPORE, April 14 (Reuters) - The U.S. dollar tumbled
to a one-year low against a basket of currencies on Friday while
the euro hit 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 on Friday and the U.S
dollar index , which measures the currency against six
major peers, tumbled to a roughly one-year low of 100.78.
It was last 0.15% lower at 100.82, and was headed for a
weekly decline of more than 1%, its steepest since January.
Meanwhile, the euro rose to a fresh one-year top
of $1.1075, pushing past Thursday's previous high.
"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."
Similarly, the British pound hit a 10-month high of
$1.2545.
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 signs 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 0.21% to
$0.6310, after jumping 1.3% on Thursday.
Elsewhere in Asia, Japan's yen rose more than 0.1%
to 132.39 per dollar, while the offshore yuan gained
0.3% to 6.8495 per dollar.
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(Reporting by Rae Wee; Editing by Christopher Cushing)
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