The dollar fell to its lowest level in 7 months, and bond yields stabilized after a sharp fall on Thursday, as another decline in major US inflation indicators raised hopes for an early end to the Federal Reserve's tightening cycle, and even its first rate cut in the second half of the year.

On Friday, the dollar index fell just under 0.1% to 102.20, with the biggest losses coming from strengthening Yen, reflecting the fact that the Bank of Japan has only recently begun to consider raising its YCC target to 0.5%.

The decline in the US CPI was perhaps less impressive than it first appeared, with almost everything attributed to a 9% drop in gasoline prices that could easily be reversed. However, analysts were almost unanimous that these figures are proof that inflation has reached its peak. This was also reflected in the inflation expectations component of the University of Michigan Consumer Sentiment Survey, released on Friday.