Dollar is rising and Japan’s inflation data is boosting the yen

The dollar rose on Friday as data indicated a resilient US labor market could prompt the Federal Reserve to keep interest rates higher for longer, while the yen strengthened after core consumer inflation in Japan accelerated again in June.

Next week, central bank meetings will be held in Europe, Japan and the United States, while investors analyze the data in order to better predict monetary policy paths.

The yen rose 0.08% to 139.97 per dollar after Japan’s core consumer price index rose 3.3% in June from a year earlier, in line with market average expectations, but still above the Bank of Japan’s 2% target.

The data reinforces the chances of the Bank of Japan revising its inflation forecast for this year, by raising new expectations next week.

The yen has fallen about 1 percent against the dollar this week and is on track to halt two weeks of gains.

Meanwhile, data showed that the number of Americans filing new applications for unemployment benefits fell unexpectedly last week, touching a two-month low, indicating continued strength in the labor market.

Markets expect the Fed to raise interest rates by 25 basis points next week, and the odds of it continuing to hike increased after the data.

Against a basket of currencies, the dollar rose 0.03 percent to 100.78. The index is on track to gain 1 percent for the week.

The euro rose 0.04% to $1.1132, after falling 0.6% on Thursday. The European Central Bank is expected to raise interest rates by 25 basis points on July 27, according to the views of all economists polled by Reuters.

The Australian dollar fell 0.28% to $0.676, and the New Zealand dollar fell 0.34% to $0.621.