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Dollar touches three-week high, lifted by recent data, Fed taper view

The dollar scaled three-week peaks on Friday, supported by better-than-forecast U.S. retail sales data released on Thursday that backed expectations for a reduction of asset purchases by the Federal Reserve before the end of the year.

The dollar index, a gauge of the greenback's value against six major currencies, rose to 93.220, the highest since the third week of August. It was last up 0.4% at 93.207.

For the week, the dollar index gained 0.6%, its largest weekly percentage rise since mid-August.

The Fed holds a two-day monetary policy meeting next week and is expected to open discussions on reducing its monthly bond purchases, while tying any actual change to U.S. job growth in September and beyond.

In afternoon New York trading, the euro slid 0.3% to $1.1729, after hitting a three-week low of $1.1724 earlier in the session.

TREASURIES-U.S. yields rise; investors await Fed hints on taper timeline

U.S. government bond yields edged up on Friday, with the 10-year yield touching a two-month high, as traders look ahead to a busy week of central bank meetings including a key one at the Federal Reserve.

The 10-year yield briefly touched 1.3855%, its highest level since July 14, and was set for a fourth consecutive week of increases, the longest such streak since March.

Investors hope to get more clarity from the Fed regarding the schedule for slowing down its asset purchases, which will also give a rough timeline for when the next rate increase could come.

The Fed is expected to tie any policy decision to U.S. job growth in September and beyond.

Euro zone yields hit two-month highs on report about ECB's inflation view

Euro zone government bond yields reached the highest in over two months on Friday after a report suggested that the European Central Bank expects to hit its inflation target by 2025, and even a subsequent partial denial did not reverse the move.

ECB chief economist Philip Lane revealed in a private meeting with German economists that the ECB expects to hit its 2% inflation goal by 2025, the Financial Times said on Thursday in a report that was partly disputed by the bank.

In addition, euro zone inflation for the month of August was confirmed at a 10-year high of 3%, well above the ECB’s target.

Euro zone yields rose broadly on Friday, with Germany’s 10-year government bond yield rising to a 10-week high at -0.265%. It was up 3 bps at -0.28% by 1506 GMT. Bps

Reference: CNBC, Reuters