Dollar firm ahead of PCE numbers, briefly pokes head above 145 yen
By Rae Wee and Alun John
SINGAPORE/LONDON (Reuters) — The yen weakened past the closely-watched 145 per dollar level on Friday although traders' fears of intervention by Japanese authorities kept it in check, while the dollar was also strong more broadly ahead of U.S. inflation data.
Barring unexpected interventions, the day's main event for FX markets is the U.S. personal consumption expenditure price index, which will be released at 0830 EST (1230 GMT) and will give the latest indicator of whether prices are slowing in the world's largest economy.
Thursday data showing the resilience of the U.S. economy suggested the Federal Reserve has a cushion to raise interest rates further if inflation data requires it, and U.S. benchmark 10 year yields rose 14 basis points on Thursday as a result, their most since late March. [US/]
FX markets followed suit and the dollar index rose 0.35% on Thursday as the U.S. currency make ground on the euro, which dropped 0.45%.
Markets were steady on Friday in early European trading with the euro flat on the day at $1.0857 around a one-week low, and sterling also little changed at $1.2617, just off the previous day's two-week low.
«One of the big themes over the past few weeks has been the positive surprises in U.S. data, and underwhelming data in the rest of the world, which is maybe bending markets back to the Fed’s messaging that we could see a second hike in Q4,» said Simon Harvey, head of FX analysis at Monex Europe.
Another 25 basis point interest rate hike by the Fed in July is all but priced in by markets, but Fed policy makers' projections, released earlier this month, are for a further rate hike on top of that before the end of the year.
Harvey said that while Thursday data
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