The dollar stood tall on Friday, on track for hefty gains for the week, after scaling 14-year highs against the euro as well as a broader basket of currencies on expectations of more U.S. Federal Reserve interest rate hikes.
The dollar has been on a tear since the Nov. 8 election of Donald Trump, whose administration is expected to embark on inflation-stoking stimulus policies. On Wednesday, the Fed raised interest rates by 25 basis point as widely expected, and also tipped three hikes instead of two in 2017.
Against its Japanese counterpart, the dollar rose 0.1 percent to 118.33 yen JPY=, after touching 118.66 yen overnight, its highest since February. It was up 2.6 percent for the week.
The dollar index, which tracks the greenback against a basket of six major rival currencies, rose 0.2 percent to 103.210 .DXY, after surging to 103.56 on Thursday. It was up 1.6 percent for the week.
The euro edged down 0.1 percent to $1.0408 EUR=, after plumbing $1.0366 on Thursday. It was down 1.4 percent for the week.
The Labor Department said its Consumer Price Index excluding volatile food and energy costs rose 0.2percent last month after edging up 0.1 percent in October. Rents accounted for most of the increase in the so-called core CPI last month.
The core CPI advanced 2.1 percent in the 12 months through November after a similar gain in October. The overall CPI rose 0.2 percent as gasoline price increases slowed and food costs remained soft. With oil prices hovering around $50 per barrel, gasoline prices are likely to push higher.
The overall CPI shot up 0.4 percent in October. In the 12 months through November, the CPI increased 1.7percent, the biggest year-on-year gain since October 2014. It rose 1.6 percent in the year to October.
The Fed has a 2 percent inflation target and tracks an inflation measure which is currently at 1.7 percent.
"Inflation is moving in the right direction, all the conditions for stronger inflation are in place. I don't think the Fed is behind the curve. We expect the next rate increase in March," said Ryan Sweet, senior economist at Moody's Analytics in Westchester, Pennsylvania.
Fed funds futures showed investors were pricing in a 40 percent chance for tightening by the Fed's March meeting, and a 50 percent probability for a May rate increase.
Oil prices reversed earlier losses on Thursday after failing to break below technical support levels and market waits to see how some of OPEC's supply cuts come through in the export data.
International Brent crude oil futures rose 18 cents to $54.08 a barrel at 2:35 p.m. ET (1935 GMT), down 14 cents from their last close.
U.S. West Texas Intermediate (WTI) crude oil futures settled down 14 cents at $50.90 per barrel.
Reference: Reuters, CNBC
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