By Ankur Banerjee SINGAPORE, Feb 10 (Reuters) – The dollar was broadly higher on Friday as investors remained risk averse ahead of U.S. inflation data next week, with worries of an economic slowdown and the pace of the Federal Reserve’s rate increases denting sentiment. The dollar index, which measures the safe-haven U.S. currency against six major peers, rose 0.155% at 103.34, having dropped 0.24% in the previous session. The index is set to eke out a weekly gain, its second straight positive week and a run it has not had since October. The euro was down 0.15% to $1.072 and was set for a second straight week of losses, while sterling was last trading at $1.2093, down 0.24% on the day ahead of GDP data for the fourth quarter. OCBC currency strategist Christopher Wong said the foreign exchange market is likely to trade sideways on Friday in the absence of key data and Federal Reserve speakers, putting the focus on the inflation data due next week. “The broad picture is the Fed doing policy calibration … but for the near term there is caution, given recent Fed speakers and how the disinflation trend may be bumpy.” Meanwhile, the yen weakened 0.12% to 131.74 per dollar. Japan’s government is planning to present the new Bank of Japan governor nominee and two deputy governor nominees to parliament on Feb. 14, Reuters reported on Thursday. The country’s wholesale prices in January rose 9.5% from a year earlier, according to data on Friday, adding to growing signs of inflationary strains that could keep the central bank under pressure to phase out its massive stimulus programme. Elsewhere, the Australian dollar fell 0.20% to $0.692, while the kiwi was down 0.24% against the U.S. dollar at $0.631. Last week, the Fed raised interest rates by 25 basis points and said it was seeing signs of disinflation, but a blockbuster jobs report rattled investors as they feared policymakers may remain hawkish for longer. Fed Chair Powell in his speech this week reiterated his belief that disinflation was under way. Richmond Fed President Thomas Barkin on Thursday said tight monetary policy was “unequivocally” slowing the U.S. economy, allowing the Fed to move “more deliberately” with any further interest rate increases. The yield on 10-year Treasury notes was down 1.6 basis points to 3.667%, not far from a month-high of 3.692% it touched on Wednesday. A closely watched part of the U.S. Treasury yield curve measuring the gap between yields on two- and 10-year Treasury notes, seen as an indicator of economic expectations, was at -82.5 basis points, having inverted as far as -88 basis points, the most in nearly two months. The deep inversion in this part of the yield curve indicates concerns about an imminent recession. The spotlight is firmly on U.S. CPI data next week as investors gauge whether disinflation taking place. “The market is more data-dependent after last Friday’s spectacular U.S. jobs report,” said DBS senior currency strategist Philip Wee. The Fed has signalled that more surprises in the inflation and jobs report before its next meeting in March could lead the central bank to lift this year’s rate forecast above the 5.1% it projected in December, Wee said. “With the Fed possibly joining other central banks in delivering more hikes, this has evened the playing field for the greenback this month,” Wee said. ======================================================== Currency bid prices at 0533 GMT Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Euro/Dollar $1.0720 $1.0739 -0.18% +0.04% +1.0742 +1.0718 Dollar/Yen 131.7800 131.5800 +0.15% +0.42% +131.8400 +131.5350 Euro/Yen Dollar/Swiss 0.9233 0.9221 +0.14% -0.14% +0.9237 +0.9220 Sterling/Dollar 1.2094 1.2119 -0.17% +0.04% +1.2122 +1.2090 Dollar/Canadian 1.3465 1.3455 +0.07% -0.62% +1.3472 +1.3450 Aussie/Dollar 0.6919 0.6937 -0.23% +1.53% +0.6948 +0.6911 NZ 0.6309 0.6327 -0.24% -0.59% +0.6330 +0.6304 Dollar/Dollar All spots Tokyo spots Europe spots Volatilities Tokyo Forex market info from BOJ (Reporting by Ankur Banerjee in Singapore Editing by Shri Navaratnam)
