Dollar steady after CPI data bolsters Fed pause bets; yen nears 145
By Ankur Banerjee
SINGAPORE (Reuters) — The dollar was steady on Friday as traders wagered that the Federal Reserve is done with rate hikes after data showed U.S. consumer prices increased moderately in July, while the yen was flirting with the psychologically key 145 level.
The Japanese yen eased 0.10% to 144.89 per dollar in early Asian hours, its lowest since June 30, when it also briefly breached 145 per dollar level, stoking investor fears of another round of interventions from the Japanese authorities.
Japan intervened in September last year when the dollar rose past 145 yen, pushing the pair to around 140 yen as the Ministry of Finance bought the yen to weaken the dollar.
The yen was also lower against the euro at 159.135, just shy of the 15-year peak of 159.19 it touched on Thursday.
Saxo Markets strategists said intervention fears might lead to some profit taking, but noted that the Japanese authorities are likely to continue to be patient.
With Japan on holiday on Friday, liquidity is expected to be thin.
Overnight, data showed the U.S. consumer price index rose 0.2% last month, matching the gain in June, with the CPI climbing 3.2% in the 12 months through July.
Economists polled by Reuters had forecast the CPI would rise 0.2% last month and by 3.3% on a year-on-year basis.
Moderating inflation, together with an easing labour market, has bolstered economists' conviction that the U.S. central bank will be able to engineer a «soft landing» for the economy.
«Inflation is grinding back towards target and the labour market is slowly cooling,» said Ryan Brandham, head of global capital markets for North America at Validus Risk Management.
«But the FOMC will want to see yet more data before deciding in
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