SINGAPORE- A sliding dollar was pushed lower still in Asia on Thursday, as traders took surprisingly slow US inflation as a signal US interest rate rises will be all but finished by month’s end.
The dollar has been steadily slipping for about six weeks, but had its worst session in five months on Thursday – falling more than 1 percent against the euro to its lowest in more than a year – as the US inflation slowdown gave dollar sellers confidence.
The euromade a fresh 15-month high of $1.1148 in Asia on Friday and the yen touched its strongest since mid-May at 138.08 per dollar. The US dollar index fell marginally to 100.42, its lowest since April 2022.
US core inflation came in at 0.2 percent in June against market expectations for 0.3 percent. Headline annual CPI fell to 3 percent and has been dropping since hitting a peak at 9.6 percent a year earlier.
Interest rate futures showed markets have fully priced a Federal Reserve rate hike later this month, but expectations of any further increases are being wound back.
“The view is that the Fed will very likely hike at the end of July and that will be the last one,” said Westpac strategist Imre Speizer.
The New Zealand dollar rose 0.5 percent to a two-month high of $0.6332 and the Aussie was up 0.4 percent to a three-week peak at $0.6813.
Moves in other currencies were smaller but still delivered new milestones as traders reckon the dollar has further to drop. The Swiss franc hit its strongest since 2015 at 0.8655 to the dollar and sterling a 15-month top of $1.3019.
The Chinese yuan steadied near a one-month high at 7.1675 per dollar, held back by weak trade data that showed exports diving at their fastest pace for three years.
