The dollar rose Friday, July 21, as data indicated the strength of the US labor market, which may prompt the US Federal Reserve to keep interest rates high for a longer period, while the yen strengthened after the acceleration of core consumer price inflation in Japan again in June.
Next week, central bank meetings will be held in Europe, Japan and the United States, while investors analyze the data in order to better predict monetary policy paths.
The yen rose 0.08% to 139.97 per dollar after Japan’s core consumer price index rose 3.3% in June from a year earlier, in line with median market expectations, but still above the Bank of Japan’s 2% target.
The data reinforces the chances of the Bank of Japan revising its inflation forecast for this year, by raising new expectations next week.
The yen has fallen about 1 percent against the dollar this week and is on track to halt two weeks of gains.
Meanwhile, data showed that the number of Americans filing new applications for unemployment benefits fell unexpectedly last week, touching a two-month low, indicating continued labor market strength.
Markets expect the US central bank to raise interest rates by 25 basis points next week, and the odds of it continuing to hike increased after the data.
Against a basket of currencies, the dollar rose 0.03% to 100.78. The index is on track to achieve a gain of 1% during the week.
The euro rose 0.04% to $1.1132, after falling 0.6% on Thursday. The European Central Bank is expected to raise interest rates by 25 basis points on July 27, according to the views of all economists polled by Reuters.
The Australian dollar fell 0.28% to $0.676, and the New Zealand dollar fell 0.34% to $0.621.
