US STOCKS-Dollar holds near 2-decade high as inflation slows

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US STOCKS-Dollar holds near 2-decade high as inflation slows

TOKYO Reuters -- The US held near a two-decade high on Wednesday after U.S. inflation moderated less than expected, keeping the Federal ReserveFederal Reserve on course to tighten policy aggressively.

The index, which measures the dollar against six major peers, fell about 0.1% to 103.92 on Thursday, but was close to the 104.19 level reached at the beginning of the week for the first time since late 2002.

In April, the consumer price index climbed 8.3% on an annual basis, easing from 8.5% in March, but outstripping the 8.1% estimate of economists.

The data suggested inflation may have peaked, but was unlikely to cool quickly and derail the Fed's current monetary policy plans.

The market is fully priced for a half percentage point increase in the policy rate at each of the next two Fed decisions, on June 15 and July 27, according to the CME FedWatch ToolFedWatch Tool.

Rodrigo Catril, senior currency strategist at National Australia Bank, wrote a client note in a client note that the stronger than expected U.S. inflation print heightened concerns over the Fed's policy tightening path.

He said that a 75 basis-point hike would be a strong possibility if the data comes five days before the June Fed meeting.

The euro rose by 0.14% to $1.0526, a bit from its five-year low of $1.04695 at the end of last month. The European Central Bank's overnight expectations that it will raise its interest rate in July for the first time in more than a decade gave rise to a lift to the single currency.

The yen continued to gain support from an easing of long-term Treasury yields from a multi-year peak above 3.2% at the beginning of the week.

The 10-year Treasury yield fell to an almost two-week low of 2.862% on Thursday, as Japan's currency gained about 0.1% to 129.835 per dollar, further away from the more than two-decade low of 131.35 reached Monday.

The Attorney-General for England and Wales told the government that it would be within its legal right to scrap large parts of the Northern Ireland protocol, and the British pound languished as the Brexit headlines returned, according to the Times newspaper.

For the first time in almost two years, the pound dropped to $1.2230 on Thursday.

In cryptocurrencies, the price of the virtual currency fell below that level for the first time since July, as it tried to retake $30,000. It rose as high as $30,090. On Friday, the last time you changed hands was about 70,185, around $29,185. It dropped as low as $27,757.