The U.S. dollar edged lower on Friday after its biggest daily increase since March the day before, as hot U.S. consumer prices data revived prospects that the Federal Reserve may have to raise rates further to get inflation back towards its 2% target.

The consumer price index (CPI) increased 0.4% in September, keeping the annual rate at 3.7%, the same as in August. Economists polled by Reuters had forecast the CPI would gain 0.3% on the month and 3.6% year-on-year.

The dollar index , which measures the U.S. currency against six of its major peers, ticked down around 0.1% to 106.36. On Thursday it rose 0.8% to 106.6, its biggest one-day jump since March 15.

The boost to the greenback on Thursday saw the yen sliding back toward the sensitive 150-line briefly touched last week before strengthening sharply, which led some to believe authorities were intervening in the currency market.

The Japanese currency was last at 149.69 per dollar , keeping traders on guard should the currency weaken further.

The euro ticked up 0.2% to $1.0547, while sterling was last trading 0.3% higher at $1.2213.

Sweden's crown , edged up against both the dollar and euro after consumer price data came in higher-than-forecast, adding to risks that the Riksbank could raise rates further.

Investors also digested producer and consumer prices data out of China on Friday that showed deflationary pressures were slightly stronger than expected.

China's trade data for September, meanwhile, showed exports and imports both shrank at a slower pace for a second month, providing some encouragement to authorities concerned about slowing growth.

The offshore Chinese yuan stayed mostly flat at 7.3075 per dollar following the data.

The Australian dollar , which often trades as a proxy for Chinese growth, last sat at $0.6324. The New Zealand dollar eased 0.1% to $0.5920.

Source : Reuters