TOKYO- The dollar held near a two-month high against the yen on Monday after a key measure of US inflation showed stronger price gains than expected, keeping alive expectations of an eventual tapering in the Federal Reserve’s asset buying.
The dollar traded at 109.87 yen having reached a 110.20 on Friday, coming within striking distance of the one-year peak of 110.97 marked at the end of March.
The US inflation data also drove the greenback higher against other currencies briefly as well, though the currency run out of steam ahead of a long weekend in New York and London.
The euro changed hands at $1.2194 off Friday’s low of $1.2133, while the British pound stood little changed at $1.4189.
US consumer prices surged in April, with a measure of underlying inflation blowing past the Federal Reserve’s 2 percent target and posting its largest annual gain since 1992, due to a recovery from the pandemic and various supply disruptions.
The core personal consumption expenditures (PCE) price index, the Federal Reserve’s preferred gauge of inflation, rose 3.1 percent from a year ago, a tad above market expectations of 2.9 percent rise.
Although the high reading was due partly to the base effect – prices were depressed in April 2020 because of strict lockdowns – and its annual rise is expected to moderate later this year, some investors remained nervous.
