FOREX-Aussie stung by soft inflation, U.S. dollar holds near 22-month high


* Australian dollar sheds 1 pct after softer CPI

* U.S. dollar within a whisker of 22-month high

* Swiss franc pulls away from 2019 lows on euro weakness

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh (Adds new analyst quote, details, latest prices)

By Tommy Wilkes

LONDON, April 24 (Reuters) - Australia's dollar dropped onepercent on Wednesday after weaker-than-expected inflationnumbers heightened the prospect of an interest rate cut, whilethe U.S. dollar held firm within a whisker of the previoussession's 22-month high.

The greenback was propelled higher by strong U.S. housingdata - the latest indicator to suggest the American economy isoutgrowing rivals, encouraging investors to snap up the dollarin recent weeks.

Data on Wednesday showed Australia's headline consumer priceindex was flat in the January-March quarter, below forecasts andthe lowest since early 2016. urn:newsml:reuters.com:*:nL3N22556J

"Given the large decline over the last 24 hours, I could seeAUD bouncing back later today just on profit-taking, but I thinkin general it's likely to be weak for some time," said MarshallGittler, currency strategist at ACLS Global, noting that themarket expectations for a rate cut in May had grown.

He also noted data indicating currency managers were longthe Aussie. "That means there are plenty of sellers of AUD leftin the market," he said.

The Aussie was the biggest mover among the main currencies,falling to a 1-1/2 month low of $0.7027AUD=D3 .

The dollar index .DXY , which measures the U.S. currencyversus a basket of six major rivals, stood at 97.622 afterrising to 97.777 overnight, its highest since June 2017.

Data on Tuesday showed sales of new single-family homes inthe U.S. jumped to a near 1-1/2-year high in March. U.S. firstquarter GDP data on Friday could strengthen the case that whilethe current period of global expansion is in its late stages,the United States is on a firmer footing. urn:newsml:reuters.com:*:nL5N225102

The euro weakened 0.1 percent to $1.12165EUR=EBS but held above Tuesday's lows of $1.1192.

A German business climate index came in below forecasts, buthad little impact on the already-weaker single currency. urn:newsml:reuters.com:*:nS8N1XY01D

"The euro is teetering as negative sentiment persists afterlast week's disappointing PMI data and only the size of shortpositions and the extent of negativity are keeping it above theyear's lows," Societe Generale currencies analyst Kit Juckessaid.

"It badly needs a dose of better data, or better news, andhigher Bund yields would help," he added.

The weakness in the euro allowed the Swiss franc tostrengthen from six-month lows marked on Tuesday.

The franc has been hit hard as investors dumped safe-havencurrencies during this year's rally in risk assets. It hadrecovered 0.3 percent to $1.1417 francs EURCHF=EBS by 0905GMT.

Sterling extended recent losses to hit another two-month lowof $1.2915GBP=D3 , as pressure grows on Prime Minister TheresaMay to come up with a Brexit plan amid stalled negotiations withthe opposition Labour party. urn:newsml:reuters.com:*:nL5N2262HK (Editing by Kirsten Donovan) ((thomas.wilkes@thomsonreuters.com))




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