The greenback surged vs its peers after data indicated that consumer prices rose at the fastest pace since January 2013 - signaling that inflation in the U.S. may be close to the Federal Reserve's target.
The dollar now logged its first weekly gain against the
euro in five weeks. It was up 2.7% on the week, but still about
6% below a more-than 12-year-high against the euro, which it touched in
mid-March.
The common currency was at $1.1115, little-changed from $1.1110 late
Thursday in New York, but down from $1.1130 immediately ahead of the
report.
The dollar rose to 121.51 yen, its highest level since
mid-March, from 121.05 yen late Thursday.
The British currency slipped to $1.5572,
from $1.5662.
The U.S. Department of Labor said that the U.S. consumer price index rose 0.1% in April, in line with expectations and after a 0.2% gain the previous month.
Year-on-year, consumer prices slipped 0.2% last month however, compared to expectations for a 0.1% downtick, following a 0.1% fall in March. The consumer price index, which excludes food and energy, rose 0.3% in April, exceeding expectations for a 0.2% increase, after a 0.2% gain the previous month.
According to analysts, the numbers were surprising for the market, which caused Treasurys, which were up ahead of the data, to decline, an early rally in gold to pause, and the dollar to move sharply higher.
The number was somewhat Fed-friendly, giving the Fed ammunition if they want to raise interest rates this year, MarketWatch reports.
Investors now bet the Federal Reserve policy makers will raise rates earlier. Higher interest rates typically lead currencies to strengthen, because they increase the return on deposits held in that currency.
Market players now await remarks from Federal Reserve Chairwoman Janet Yellen, who is scheduled to speak about the economic outlook in Providence, R.I.
