Dollar rises as investors look forward to next week’s inflation report; Yen rose According to Reuters

(Recast, add new commentary, US data, price update)

By Gertrude Chavez-Dreyfuss

NEW YORK (Reuters) – The dollar rose on Friday as investors worried about next week’s U.S. inflation report that could show a higher-than-expected number in the market amid data for the… Expect prices to continue to rise next year.

The yen also rallied with Kazuo Ueda tipped to become the next governor of the Bank of Japan (BOJ) but pared gains after he said the central bank’s monetary policy was appropriate. The Japanese unit is on track to post its first weekly gain against the dollar after posting losses for three straight weeks.

As data continues to show positive US momentum, the dollar is on track for a second week of gains against a basket of six currencies, gains not seen since October.

The University of Michigan surveys on Friday showed a one-year inflation outlook of 4.2 percent, higher than the last figure in January. The overall consumer sentiment index stood at 66.4, up from 64.9 in the previous month.

Federal Reserve Chairman Jerome Powell cited the Michigan survey’s inflation outlook as one of the indicators the US central bank tracks.

In addition to the Michigan data, the revisions showed monthly U.S. consumer prices rose in December instead of falling as previously estimated, while the data for the previous two months was also revised higher, according to the data. Bureau of Labor Statistics.

Mazen Issa, senior forex strategist at TD Securities, said next week’s CPI report was “in the spotlight because this morning we had signs that…inflation is trending strong. than originally predicted last year.”

“This really challenges the idea that the Fed can cut rates and stronger data like payrolls, ISM (Institute of Supply Management) and continued tightening of the labor market. is driving… the Fed’s longer-term higher policy stance… ..and that could be what’s going to happen in the end. That puts the dollar back on the front foot.”

Next Tuesday’s data is likely to show the US consumer price index (CPI) up 0.4 per cent month-on-month in January and core CPI also up 0.4 per cent, according to a poll by Reuters. Reuters.

In afternoon trading, the index, which measures the greenback against six other currencies, rose 0.4 percent to 103.55.

BOJ’s TOP WORK

In Japan, it was earlier reported that the government would appoint scholar Ueda to the top position of the BOJ, sending the yen up as the market predicted the possibility that extremely loose monetary policy could end. earlier.

But in comments streamed by Nippon TV, Ueda said the central bank’s current easing monetary policy is appropriate and it should continue, causing some of the previous yen’s strength to be reversed. reverse.

Japanese Prime Minister Fumio Kishida said the government was planning to introduce the BOJ gubernatorial candidate to parliament on Tuesday, but did not respond to a question whether Ueda would be put forward.

“It’s really easy if big hawkish changes are coming to the BOJ,” said Juan Perez, chief trading officer at Monex USA in Washington.

The dollar fell to as low as 129.8 yen, a one-week low, and eventually fell slightly to 131,435 yen.

The euro and pound both fell more than 1% against the Japanese currency and were last down around 0.7% to 140.34 yen and 0.5% lower to 158.60 yen.

The BOJ shocked the market in December when it raised the 10-year government bond yield ceiling from 0.25% to 0.5%, doubling the allowable margin above or below its zero target.

Since then, there has been much speculation that the BOJ might tweak or scrap its yield-curve control policy, although it refrained from any changes at its most recent meeting.

The pound fell 0.5% to $1.2056. Earlier in the session, Britain managed to avoid a technical recession, with the economy not growing in the last three months of 2022.

The euro fell 0.6 percent to $1.0679 and is set for a second consecutive week of losses.

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Currency bid price at 3:54 pm (2054 GMT)

RIC Description Last US Close Pct Change YTD Pct High Bid Low Bid

Previous change

Meeting

Dollar Index 103.5500 103,2000 +0.35% 0.058% +103.6800 +102.8900

Euro/Dollar $1.0679 $1.0739 -0.55% -0.33% +$1.0753 +$1.0666

Dollar/Yen 131.3850 131.5300 -0.09% +0.23% +131.8650 +129,8000

Euro/Yen 140.31 141.27 -0.68% +0.01% +141.4900 +139.5700

Dollar/Swiss 0.9237 0.9221 +0.20% -0.08% +0.9252 +0.9200

British Pound/Dollar $1.2055 $1.2119 -0.52% -0.31% +$1.2138 +$1.2047

Dollar/Canadian 1.3339 1.3455 -0.86% -1.55% +1.3472 +1.3339

Australian Dollar/Dollar $0.6921 $0.6937 -0.22% +1.53% +$0.6960 +$0.6910

Euro/Switzerland 0.9865 0.9902 -0.37% -0.30% +0.9906 +0.9864

Euro/British Pound 0.8856 0.8860 -0.05% +0.14% +0.8872 +0.8824

New Zealand $0.6308 $0.6327 -0.37% -0.72% +$0.6346 +$0.6299

dollar/dollar

Dollar/Norway 10.1280 10.1765 -0.28% +3.41% +10.2150 +10.1015

Euro/Norway 10.8309 10.9283 -0.89% +3.21% +10.9540 +10.8050

Dollar/Sweden 10.4605 10.3427 +0.59% +0.51% +10.4796 +10.3043

Euro/Sweden 11.1720 11.1063 +0.59% +0.19% +11.1855 +11.0620