Dollar flat after inflation data, yen set for strongest weekly gain in 15 months
U.S. Dollar banknotes are seen in this illustration taken July 17, 2022. REUTERS/Dado Ruvic/Illustration
NEW YORK, Feb 13 : The U.S. dollar was mostly flat against peer currencies on Friday after data showed a less-than-expected increase in inflation in January, suggesting the Federal Reserve could continue to hold rates steady in the near term.
The Japanese yen was set for its strongest weekly gain in about 15 months.
U.S. Labor Department data on Friday showed that the consumer price index rose 0.2 per cent last month compared with an estimate of 0.3 per cent from economists polled by Reuters.
The euro was 0.02 per cent higher at $1.1873 against the dollar, but was set to gain 0.5 per cent this week. Against the Swiss franc, the dollar weakened 0.22 per cent to 0.76785 and was on course for a weekly loss of 1 per cent.
The dollar's behavior reflects market positioning as it awaits fresh central bank signals on the direction of interest rates, said Olivier Bellemare, senior derivatives trader at Monex Canada in Montreal.
MARKET REACTION IS 'TIMID'
Earlier this week, data suggested the U.S. labor market was stabilizing with a drop in the U.S. unemployment rate amid strong jobs growth in January and a less-than-expected decrease in the number of Americans filing new applications for unemployment.
"The market reaction to the data was timid at best and the moves were mostly tactical," Bellemare said.
The dollar index edged lower by 0.07 per cent to 96.85, on track to shed 0.84 per cent for the week.
The dollar's relative weakness is partly driven by volatile U.S. policymaking in January, recent software sector selloff that has reduced U.S. equity market outperformance, and "idiosyncratic" developments in Asia, especially a steadily strengthening Chinese yuan, said Goldman Sachs analysts including Alexandra Kanter in an investor note.
YEN'S STRONG PERFORMANCE
The yen has dominated activity in the foreign exchange market this week, after Japanese Prime Minister Sanae Takaichi's historic election win allayed some investor worries about the government's finances.
The yen was still headed for a gain of nearly 3 per cent for the week, its largest rise since November 2024, and was up 0.08 per cent on the day at 152.67.
The yen was up 0.02 per cent against the euro at 181.29 and was headed for a 2.37 per cent weekly jump against the single currency, its strongest performance in a year.
"Over the longer term, yen‑weakening risks remain firmly in place," said Bank of America Global Research analysts led by Claudio Piron in an investor note. "But in the near term, the combination of potential intervention and scope for the market to further price-in Bank of Japan hikes at the March and April meetings skews the risk‑reward for USD/JPY to the downside."
The Australian dollar, the top-performing major currency of 2026 so far after soaring in recent weeks on a hawkish Reserve Bank of Australia, was down 0.20 per cent at $0.70765, but still headed for a nearly 1 per cent gain this week.
The Canadian dollar strengthened 0.10 per cent versus the greenback to C$1.361 per dollar, still set to drop 0.45 per cent for the week.
