Investing.com - The dollar rose to fresh six month highs against the yen on Thursday and was steady against a currency basket as solid gains in the latest U.S. inflation report reinforced expectations for two additional rate hikes by the Federal Reserve this year.
USD/JPY was up 0.35% at 112.37 by 03:39 AM ET (07:39 AM GMT), the strongest level since January 10, after gaining around 1% in the previous session.
U.S. producer prices posted the largest annual gain in six-and-a-half years in June, the Labor Department reported Wednesday, adding to signs of strength in the economy.
Investors were looking ahead to data on U.S. consumer price inflation which was due later in the trading day.
The upbeat economic data helped offset concerns over international trade tensions. A trade spat between the U.S. and China escalated on Wednesday after Washington threatened to slap 10% tariffs on $200 billion worth of Chinese imports.
The tit-for-tat tariffs have fueled worries that the world’s two largest economies could descend into an all-out trade war, which investors fear could hit global growth.
The U.S. dollar index, which measures the greenback’s strength against a basket of six major currencies, was steady near a one week high at 94.44, having risen 0.67% on Wednesday.
The euro was a touch higher, with EUR/USD rising 0.12% to 1.1687, still well below Monday’s three-and-a-half week highs of 1.1790.
The pound was fractionally higher, with GBP/USD last at 1.3215 as investors awaited the publication of the UK government’s Brexit white paper, which would outline its preferred future relationship with the European Union.
The Canadian dollar was steady near one-and-a-half week highs, with USD/CAD at 1.3201, a day after the country’s central bank hiked interest rates, citing a strong labor market and on-target inflation.
The trade sensitive Australian dollar pushed higher, with AUD/USD adding on 0.22% to trade at 0.7384.