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.

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.

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.

The dollar's gains also helped it to as high as 145.07 yen in Asia trade Friday, its highest in seven months, and into territory at which Japanese authorities intervened to prop up their currency last autumn.

However, the dollar failed to hold those gains and was last flat on the day at 144.88 yen.

Source : Reuters