On Friday, traders increased predictions of an impending halt to the U.S. Federal Reserve’s rate-hike cycle on signs of slowing inflation, sending the U.S. dollar plummeting to a one-year low versus a basket of currencies while the euro reached a one-year high.
A day after inflation statistics indicated a moderating in consumer prices, data from the U.S. Labour Department on Thursday showed the producer pricing index (PPI) decreased by the most in over three years last month.
The U.S. dollar index, which compares the currency to six major peers, fell to a roughly one-year low of 100.78 on Friday as the dollar continued to decline.
It was last trading 0.15% lower at 100.82 and was on pace for its biggest weekly decrease since January, a weekly loss of more than 1%. In the meantime, the euro increased to a new one-year high of $1.1075 by surpassing the previous high set on Thursday. Similarly, the British pound hit a 10-month high of $1.2545.
Money markets are pricing in a 69% likelihood that the Fed will increase interest rates by 25 basis points next month, but they are also pricing in a series of reductions from July through the end of the year, with rates seen just above 4.3% in December.
An unexpected rise in Chinese exports, which in March soared up 14.8% from the same month a year earlier, stunned experts who had forecast a 7.0% decline in a Reuters poll, added to the indications that the pressure on global inflation is easing.
