The US dollar held steady on Friday as investors remained on guard ahead of the US annual inflation rate forecast which is expected to restrain the greenback from further gains.

The greenback’s recent boost against the yen has slowed down just before the end of this week as Federal Reserve (Fed) Chair Janet Yellen held back some of the financial tightening expectations that had advanced the dollar.

Traders will also be looking at the US consumer price index (CPI) data as the next important inflection point with year-on-year inflation rate estimated to decline for a fourth consecutive month by 1.7 percent in June following a similar gain in May, it would also be the lowest since November 2016.

Yellen said in her testimony that the Fed is keeping a close eye on the inflation and it is still early to assume the underlying trend of prices is falling short of the central bank’s target of 2 percent.

CPI is expected to rise 0.2 percent on a month-to-month basis after a 0.1 percent increase earlier month, a soft result may wane Fed rate hike speculation even more therefore burdening the US dollar.

Major Currencies


The US dollar index against a basket of major currencies lost 0.08 percent to 95.69 and is set to end the week 0.25 percent lower.

The greenback declined against the yen by 0.06 percent to 113.22 and still a bit far from reaching a four-month peak of 114.49 hit on Tuesday.

Chief economist Etsuko Yamashita said that if the US CPI would be weaker than expected, it could not only shift USD/JPY below 113 but make a new range lower than 113 instead.

But if it surpasses forecast, it would lift the dollar on hopes for rate increase and balance-sheet cut as planned.

Other than the yen, the dollar was on the gaining side with the rest of the major currencies including a 0.2 boost to 0.9695 against the Swiss franc.

The euro added 0.1 percent to 1.1416 against the dollar while the British pound was also 0.1 percent higher to 1.2966, a breakout of 1.2984 would likely lead the pound to a high of 1.3051.

Other currencies including the Australian dollar gained 0.3 percent to 0.7759 extending weekly gain to 1.9 percent, its biggest since period ended March 17.

The New Zealand dollar another high-earning currency that has gained from significant risk appetite this week, shed 0.02 percent to 0.7318 after reaching an eight-month peak of 0.7369 on Thursday.

Asian Currencies


The highly-anticipated inflation data due later in the day had most Asian currencies subdued on Friday with the dollar losing 0.2 percent to 33.850 against the Thai baht while Chinese yuan lost 0.01 percent to 6.7826.

The greenback edged down 0.2 percent to 1134.30 against Korean won.

The Philippine peso somewhat recovered 0.1 percent to 50.610 after earlier fall of 0.3 percent while Indian rupee was steady at 64.4580.

Philippines Budget Secretary Benjamin Diokno said earlier that he is not worried about the weakening peso since the country has enough covers and a stable source of foreign exchange inflows.  

The US dollar added 0.08 percent to 1.3746 against the Singapore dollar while the Malaysian ringgit was up 0.01 percent to 4.2908.

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