Investing.com – The U.S. dollar settled slightly higher on Friday, ahead of the release of key inflation data today, while falling after the Bank of Japan on Friday maintained ultra-low interest rates.
The dollar index, which measures the greenback against a basket of six other currencies, is trading higher at 110,705, up about 0.24%.
The dollar saw some strength on Thursday in the wake of the sharp drop in the euro, which carries the heaviest weight in the index, after the European Central Bank raised interest rates by 75 basis points, as expected, but took a dovish tone regarding interest rates.
However, this came on the heels of the previous weakness as expectations increased that the Fed would shift to a less hawkish pace in terms of monetary tightening.
Important indicators today.. the preferred metric
With that in mind, traders will focus on the release of the core PCE price index, my favorite inflation gauge, later in the session for clues to the intentions of central bank policy makers at next week’s policy setting meeting. This is expected to show a monthly increase of 0.5% in September, down slightly from 0.6% in the previous month.
The dollar against the yen
The USD/JPY currency pair rose 0.1% to 146.43 after the Bank of Japan left its -0.1% target for short-term interest rates and pledged to guide the 10-year bond yield around 0%.
However, the BoJ revised its inflation forecast to 2024, indicating more near-term pain for the Japanese economy and adding pressure on the currency.
The dollar against the euro
The US dollar rose 0.1% to 0.9969, approaching parity after sharp losses overnight as the European Central Bank hinted at a less aggressive pace in rate hikes, reversing a sign of rate increases “over the next several meetings” that appeared in its September statement. .
The French economy expanded 0.2% in the third quarter, an official preliminary reading showed on Friday, in line with expectations, but down from the 0.5% quarterly growth seen in the previous quarter.
Dollar and other currencies
The GBP/USD pair fell 0.3% to 1.1526, giving some gains for the week approaching 2% on optimism that new British Prime Minister Rishi Sunak will adopt a more fiscally cautious stance than his predecessor Liz Truss outlined in her short term.
The AUD/USD fell 0.2% to 0.6433, the NZD/USD rose 0.1% to 0.5832, while the USD/CHN rose 0.1% to 7.2367, after China imposed new insurance measures against the spread of the virus. COVID-19, adding to uncertainty about the country’s ability to recover.