A bruised dollar was nudged lower still in Asia on Thursday, as traders took surprisingly slow U.S. inflation as a signal U.S. interest rate rises will be all but finished by month's end.

The dollar had its worst session in five months overnight, falling more than 1% against the euro to its lowest in more than a year and notching even larger losses elsewhere.

The euro hit a fresh 15-month high of $1.1141 in early Asia trade and the yen , up 0.3% at 138.16 per dollar, was its strongest since mid-May. The U.S. dollar index fell marginally to 100.47, its lowest since April 2022.

The New Zealand dollar reached a two-month high of $0.6309 and the Aussie a three-week peak of $0.6796.

The moves were small, yet showed traders' faith the dollar has further to fall. The yuan touched a one-month high at 7.1604 to the dollar in offshore trade. Sterling and Swiss franc were testing overnight highs.

U.S. core inflation came in at 0.2% in June against market expectations for 0.3%. Headline annual CPI fell to 3% and has been dropping since hitting a peak at 9.6% a year earlier.

In Asia the yen is up 4.8% against the dollar in five trading days and almost as much on other major crosses as short-sellers have been cleared out and market focus turns to whether the Bank of Japan (BOJ) might soon tweak its yield control policy.

Sterling sat at $1.2994, just below its overnight high of $1.3001. The Swiss franc , which hit its highest since 2015 overnight, traded just below that level at 0.8661 francs to the dollar.

Source : Reuters