Dollar sags as slower US inflation boosts rate cut expectations

By Tom Westbrook

SINGAPORE (Reuters) - The dollar skidded to multi-month lows on Thursday after U.S. core inflation hit its slowest in three years and retail sales turned flat, which pulled forward expectations for rate cuts in the world's biggest economy.

Stocks and other risk-sensitive assets such as the Australian dollar led gains in the wake of the data release. The Aussie rose 1% overnight in its sharpest one-day jump for the year, and tacked on a further 0.1% in early Asia trade to hit a four-month high of $0.67. [AUD/]

The euro, which climbed 0.6% overnight, edged up to a two-month high at $1.0890. The New Zealand dollar hit a two-month high at $0.6131. Sterling made a one-month high at $1.2694.

The battered yen earned a reprieve and traded at its strongest on the dollar for a week at 154.25.