NEW YORK: The US 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 a year. US Labor Department data on Friday showed that the consumer price index rose 0.2 percent last month compared with an estimate of 0.3 percent from economists polled by Reuters.
The euro was 0.07 percent lower at USD1.1863 against the dollar, but was set to gain 0.4 percent this week. Against the Swiss franc, the dollar
weakened 0.13 percent to 0.7684 and was on course for a weekly loss of 0.95 percent.
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.
Earlier this week, data suggested the US labor market was stabilizing with a drop in the US 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 higher by 0.02 percent to 96.95, on track to shed 0.73 percent for the week.
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 2.64 percent for the week, its largest rise since February last year, although it was down 0.15 percent on the day at 153.08.
The yen was down 0.14 percent against the euro but still was headed for a 2.27 percent weekly jump against the single currency, its strongest performance in a year.
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 0.47 percent at USD0.705, but still headed for a 0.66 percent gain this week.
The Canadian dollar strengthened 0.01 percent versus the greenback to CD1.361 per dollar, still set to drop 0.45 percent for the week.
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