SINGAPORE, Dec 22 Reuters The dollar stabilised above a more than fourmonth low on Friday, with a key U.S. inflation gauge due later in the day that could offer clarity on how much room the Federal Reserve has to cut interest rates next year.

The greenback hit a fivemonth trough against the New Zealand dollar and a threeweek low against the euro in early Asia trade, before turning positive later in the session.

The kiwi was last 0.27 lower at 0.6277 after hitting a session high of 0.6298, while the euro peaked at 1.10125 before retreating 0.12 to 1.0996.

Friday brings the U.S. core personal consumption expenditures PCE print the Fed39;s preferred measure of underlying inflation and expectations are for the core measure to have risen 3.3 on an annual basis, compared to October39;s 3.5 increase.

The distribution for U.S. inflation is now considered skewed and onesided, with a high probability of lower levels, said Chris Weston, head of research at Pepperstone.

Hence, the Fed has increased scope to ease policy should the need arise, and while Fed officials are saying their work is not done, and the last push to get to its 2 inflation target is the hardest part, they can front load cuts far more efficiently when core PCE is at 3.5 and falling.

Against a basket of currencies, the greenback was last up 0.08 at 101.86, edging further from the more than fourmonth low of 101.72 hit in the previous session.

The dollar index was still on track for a weekly loss of about…