NEW YORK: The US dollar slid and China’s yuan gained on Wednesday after Chinese manufacturing activity expanded at its fastest pace in a decade, while the euro rose after German inflation data surged last month and raised rate hike expectations in the euro zone.

The Australian and New Zealand dollars also gained on the robust Chinese data, which smashed expectations with the official manufacturing purchasing managers’ index (PMI) shooting up to 52.6 last month from 50.1 in January.

The euro gained 0.63% to $1.0643 with a large option expiry on Friday at $1.07. Against a basket of currencies, the dollar index fell 0.295%, on pace to it’s biggest single-day decline since Feb. 1.

The index rose nearly 3% in February, its first monthly gain after a four-month losing streak, as a slew of strong US economic data in recent weeks raised market expectations that the Federal Reserve has further to go in hiking rates. Futures pricing continues to edge higher, with a peak rate climbing on Wednesday to 5.45% in the fed funds by September.

The onshore yuan finished the domestic session at 6.8854 per dollar, the strongest close since Feb. 21, while the offshore yuan jumped 1.3% to 6.8683 per dollar, set for its largest one-day gain since late November. The kiwi surged 1.3% to $0.6263, while the Aussie gained 0.7% to $0.6774, reversing the slide to a two-month low earlier on Wednesday following soft domestic economic data.