LONDON—The yen got a boost on Thursday, while the dollar held near a seven-month low against the euro ahead of U.S. inflation data later in the day.
The Japanese yen rose as much as 0.8 percent to a session high of 131.36 per dollar in Asian trade. The yen last bought 131.70 per dollar.
Elsewhere, the dollar was a touch higher ahead of the closely watched U.S. inflation data, which could provide more clarity on how quickly price pressures are easing in the world’s largest economy and the impact on the Federal Reserve’s rate-hike path.
The U.S. dollar index was up 0.1 percent to 103.25, not far off its seven-month low of 102.93 hit earlier in the week.
Expectations that the Fed may be nearing the end of its aggressive monetary policy tightening campaign and that it may not have to raise rates as high as previously feared has already sent the greenback tumbling to multi-month lows against its peers this year.
“There’s a coherent message of an easing of price pressures in the United States, so even if you get one upside surprise to CPI that wouldn’t completely undermine the trend,” said Chris Turner, global head of markets at ING in London.
“Last Friday’s sub-50 ISM services data adds to recessionary fears and that supports the soft dollar backdrop where the Fed would be allowed to ease policy later in the year,” Turner added, with ING forecasting a further 50 basis points of rate hikes this year before 100 basis points of cuts in the second half.
Sterling slipped 0.1 percent to $1.2140, while the euro was 0.1 percent lower at $1.0747, after rising to a seven-month peak of $1.07765 in the previous session.
The euro continues to find support from hawkish messaging from European Central Bank officials, with four calling for additional rate increases on Wednesday.
“Our expectations are for another 125 basis points of rate hikes from the ECB and stay there until 2024,” ING’s Turner said.
“Our core views for Fed policy versus ECB policy would be for a stronger euro-dollar through the year.”
The Aussie slipped 0.2 percent to $0.6893, while the kiwi fell 0.3 percent to $0.6344.
Data released on Thursday showed that Australia’s trade surplus unexpectedly widened in November and came in well above forecasts.
China’s offshore yuan last stood at 6.7589 per dollar, after hitting a five-month high of 6.7545 per dollar earlier in the session, on optimism that China’s economy is on the road to recovery.
Meanwhile, bitcoin was higher for the fifth consecutive day, hitting its highest level in a month at $18,370.
