NEW YORK – The US dollar rose after data showed inflation grew in March, though at a slower pace, keeping the Federal Reserve still firmly on track to raise interest rates at next week’s monetary policy meeting.
The yen, meanwhile, fell across the board, after the Bank of Japan said it would maintain ultra-low interest rates as expected, and unanimously decided to make no changes to its yield curve control (YCC) policy.
The Japanese currency plunged to its lowest since September 2008 against the euro, and its weakest level in seven weeks versus the dollar.
The euro was last up 1.5 percent against the yen at 150. On the week, Europe’s single currency rose 1.8 percent.
The dollar, on the other hand, last traded 1.7 percent higher at 136.235 yen, posting a weekly gain of 1.6 percent, its best weekly performance since late February.
The dollar index, a measure of the greenback’s value against six major currencies, rose 0.2 percent to 101.65.
Friday’s data showed the personal consumption expenditures (PCE) price index edged 0.1 percent higher in March after rising 0.3 percent in February. In the 12 months through March, the PCE price index increased 4.2 percent after climbing 5.1 percent in February.
Excluding the volatile food and energy components, the PCE price index inched up 0.3 percent after increasing at the same rate in February. The so-called core PCE price index gained 4.6 percent on a year-on-year basis in March after rising 4.7 percent in February.
The Fed tracks the PCE price indexes for its 2 percent inflation target.
“You probably need a much bigger slowing in the growth rate to get the Fed comfortable that it’s succeeded in its mission; it’s not there yet,” said Joseph Lavorgna, chief US economist at SMBC Nikko Securities in New York. “It doesn’t change the outlook (for policymakers next week).” – Reuters
