The U.S. dollar edged slightly higher Friday, and was on course to end a five-week losing streak ahead of the release of key inflation data.
At 04:00 ET (09:00 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, traded 0.1% higher to 101.314, after having climbed to its highest level since Aug. 22 at 101.58 on Thursday.
Dollar on course for weekly gain
The dollar is on course for a 0.6% gain this week, which would be its best week since the start of April, helped by persistent signs of U.S. economic resilience, after gross domestic product data showed the economy grew more than initially estimated in the second quarter.
However, the U.S. currency is still set for a drop of about 2.5% in August, which would be its worst month since November, as traders factored in the Federal Reserve starting a rate-cutting cycle.
Eurozone inflation cools
In Europe, EUR/USD traded 0.1% higher to 1.1092, after the August eurozone consumer inflation release confirmed signs of slowing inflation.
Eurozone CPI rose 2.2% on an annual basis in August, a drop from 2.6% the prior month, and a monthly gain of 0.2%.
The European Central Bank started cutting interest rates in June, and a sharp drop in inflation is likely to prompt policymakers to cut once more next month.
GBP/USD gained 0.2% to 1.3188, close to its strongest level since March 2022, boosted by expectations that the Bank of England will keep interest rates high for longer than in the United States and the eurozone.
The BoE cut rates by 25 basis points on Aug. 1 to 5% and money markets price in a further 40 bps of cuts by year-end.
Yen close to recent highs
In Asia, USD/JPY steadied at 145.01, close to lows hit in early-August, during the peak of the pro-yen trade.
Consumer price index data from Tokyo showed inflation grew slightly more than expected in August, with core inflation moving back towards the Bank of Japan's 2% annual target amid improving private spending.
The reading furthered the notion that increasing inflation will give the BOJ more headroom to hike interest rates more this year. The CPI reading also helped markets look past disappointing industrial production and retail sales prints.
Source: Investing.com
