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U.S. PPI report eases inflation concerns, sending dollar

and

Treasury yields lower

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Euro supported by optimism around Ukraine-Russia peace

talks

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Perceived room for tariff negotiations soothes trade war

anxieties

By Brigid Riley

TOKYO, Feb 14 (Reuters) - The U.S. dollar and major

currencies steadied on Friday, as traders assessed the potential

impact of Washington's reciprocal tariffs which will not be

immediately implemented, while a U.S. producer price report

eased inflation concerns.

U.S. President Donald Trump directed his economic team on

Thursday to formulate plans for reciprocal tariffs on every

country that imposes taxes on U.S. imports.

Although the tariffs would not be implemented immediately,

they could be enforced within weeks as Trump's trade and

economic team studies bilateral tariff and trade relationships,

a White House official said.

The delayed implementation buoyed expectations that there

may yet be room for countries to negotiate.

"Tariff ambiguity still reigns, but markets are currently

drawing some comfort from the news the next set won't come into

effect before April," Ray Attrill, head of FX strategy at

National Australia Bank, wrote in a research note.

The greenback was on the back foot, hovering near its

weakest since January 27 at 107.25 as the latest producer price

report overshadowed looming tariff threats.

Headline U.S. PPI came in above forecasts, but components

suggest core PCE inflation, the Federal Reserve's preferred

measure, is likely to be lower than feared for January when it

is released later this month.

While PPI details were "more favourable," key components of

U.S. consumer prices in January showed strong increases,

indicating PCE may still rise from the previous month at a pace

above the Fed's 2% inflation target, said Carol Kong, a currency

strategist at Commonwealth Bank of Australia.

"We expect the Fed to remain cautious amid concerns about

the stalled disinflation process and President Trump's tariff

increases," she added.

Futures traders have about 33 basis points of cuts priced in

for this year. That is up from 29 basis points before Thursday's

data, but down from 37 basis points before the CPI data was

released on Wednesday.

The dollar index, which measures the greenback

against a handful of peers, was nearly flat at 107.07.

U.S. Treasury yields declined as investors took comfort in

the PPI numbers, helping the yen to claw back most of its losses

after weakening to 154.80 on Wednesday.

The Japanese currency was up marginally at 152.64

on Friday but remained on track for its first weekly loss since

early January.

The euro loitered near its highest in more than

two weeks at $1.046925 in early Asian trade, supported by

optimism around potential peace talks between Ukraine and

Russia. It was last down 0.04% at $1.0461.

On Wednesday, Trump discussed the war in Ukraine in phone

calls with Russian President Vladimir Putin and Ukrainian

President Volodymyr Zelenskiy.

He said on Thursday that Ukraine would have a seat at the

table during any peace negotiations with Russia.

Sterling touched $1.25705, its firmest since

January 7, and was last down 0.07% at $1.256. Data on Thursday

showed that Britain's economy unexpectedly grew by 0.1% in the

final quarter of last year.

The Canadian dollar stood just above a two-month

high of C$1.4184 hit in the previous day, boosted by the fall in

U.S. Treasury yields.