The euro languished close to a two-week low to the dollar as cooling inflation in Germany and Spain boosted the case for European Central Bank easing. The yen held near the closely watched 145 per dollar level after weakening on Thursday, as the dollar tracked a rise in U.S. Treasury yields.
The Japanese currency largely ignored data on Friday showing core consumer prices in Tokyo climbing at a faster than expected 2.4 percent in August, again topping the Bank of Japan’s 2 percent target, although a measure that also strips out energy costs rose by just 1.6 percent.
The U.S. data showed gross domestic product grew a 3.0 percent annualized rate in the second quarter, an upward revision from the 2.8 percent rate reported last month.
Traders more strongly favour a quarter-point Fed rate reduction on Sept. 18, laying only 34 percent odds of a 50-basis point cut, down from 38 percent a day earlier, according to the CME Group’s FedWatch Tool.
The U.S. dollar index — which measures the currency against a basket of six major peers — was little changed at 101.34 as of 0032 GMT, after rising 0.36 percent on Thursday and touching the highest since Aug. 22 at 101.58.
It’s on course for a 0.66 percent gain this week, which would be its best week since the start of August and snap a five-week losing streak. Over August, though, it’s set for a 2.6 percent drop, which would be its worst month since November.
The dollar eased 0.14 percent to 144.78 yen, after rising as high as 145.55 overnight for the first time since Aug. 23. The euro was flat at $1.1082 and dropped as low as $1.10555 on Thursday. Sterling was steady at $1.31655 after dipping to $1.3146 overnight for the first time since Aug. 23.
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