(Recasts, adds new comment, U.S. data, updates prices)
Japan to present new BOJ governor to parliament on Feb. 14
U.S. dollar index on track to post 2nd straight week of gains
U.S. consumer sentiment improves, but inflation outlook rises
U.S. consumer prices firmer than previously reported
The dollar gained on Friday as investors grew concerned about a U.S. inflation report next week that could show a number that is higher than markets forecast amid data showing expectations for a continued rise in prices over the next year.
The yen also rose across the board with Kazuo Ueda reportedly set to become the next Bank of Japan (BOJ) governor but pared gains after he said the central bank's monetary policy was appropriate. The Japanese unit was on track for its first weekly gain versus the dollar after posting losses for three straight weeks.
As the data continued to show positive U.S. momentum, the dollar was on pace for its second weekly rise against a basket of six currencies, a run it has not seen since October.
The University of Michigan surveys on Friday showed a one-year inflation outlook of 4.2%, higher than the final number in January. The overall index of consumer sentiment came in at 66.4, up from 64.9 the prior month.
Federal Reserve Chair Jerome Powell has cited the Michigan survey's inflation outlook as one of the indicators the U.S. central bank tracks.
Aside from the Michigan data, revisions showed that
U.S. monthly consumer prices
rose in December instead of falling as previously estimated, while data for the prior two months was also revised higher, according to the Bureau of Labor Statistics.
Mazen Issa, senior FX strategist at TD Securities said next week's CPI report has been "put in the crosshairs because this morning we had indications that...inflation was on a stronger footing than initially perceived last year."
"This is really challenging the idea that the Fed could cut rates and stronger data like payrolls, ISM (Institute for Supply Management) and continued tightness in labor markets are pushing the...higher-for-longer policy stance by the Fed...and that might what ends up happening. That puts the dollar back on the front foot."
Data next Tuesday is likely to show that the U.S. consumer price index (CPI) climbing 0.4% month-on-month in January and the core CPI gaining 0.4% as well, according to a Reuters poll.
In afternoon trading, the dollar index =USD , which measures the greenback against six other currencies, was up 0.4% at 103.55.
BOJ'S TOP JOB In Japan, the Nikkei had earlier reported the government would nominate academic Ueda to the BOJ's top job, sending the yen surging as markets anticipated a possible earlier end to ultra-loose monetary policy.
But in comments streamed online by Nippon TV, Ueda said the central bank's current easy monetary policy was appropriate and that it should continue, prompting some of the earlier yen strength to be reversed.
Japanese Prime Minister Fumio Kishida said the government is planning to present the BOJ governor nominee to parliament on Tuesday, but did not answer a question on whether Ueda would be put forward.
"It is truly up in the air if major hawkish changes are coming to the BOJ," said Juan Perez, director of trading at Monex USA in Washington.
The dollar sank as low as 129.8 yen JPY=EBS , a one-week trough, and was last slightly down at 131.435 yen.
The euro EURJPY=EBS and sterling GBPJPY=EBS both fell more than 1% against the Japanese currency and were last down roughly 0.7% at 140.34 yen and down 0.5% at 158.60 yen, respectively.
The BOJ shocked markets in December when it raised the cap on 10-year government bond yields to 0.5% from 0.25%, doubling the band it would permit above or below its target of zero.
Since then, speculation has gathered pace that the BOJ could adjust or scrap its yield curve control policy, even though it refrained from any changes at its last meeting.
The pound GBP=D3 was down 0.5% at $1.2056. Earlier in the session, Britain managed to avoid a technical recession, with the economy showing zero growth in the final three months of 2022.
The euro EUR=EBS fell 0.6% to $1.0679 and was set for a second straight week of losses.
======================================================== Currency bid prices at 3:54PM (2054 GMT)Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid Previous Change Session Dollar index =USD 103.5500 103.2000 +0.35% 0.058% +103.6800 +102.8900 Euro/Dollar EUR=EBS $1.0679 $1.0739 -0.55% -0.33% +$1.0753 +$1.0666 Dollar/Yen JPY=EBS 131.3850 131.5300 -0.09% +0.23% +131.8650 +129.8000 Euro/Yen EURJPY= 140.31 141.27 -0.68% +0.01% +141.4900 +139.5700 Dollar/Swiss CHF=EBS 0.9237 0.9221 +0.20% -0.08% +0.9252 +0.9200 Sterling/Dollar GBP=D3 $1.2055 $1.2119 -0.52% -0.31% +$1.2138 +$1.2047 Dollar/Canadian CAD=D3 1.3339 1.3455 -0.86% -1.55% +1.3472 +1.3339 Aussie/Dollar AUD=D3 $0.6921 $0.6937 -0.22% +1.53% +$0.6960 +$0.6910 Euro/Swiss EURCHF= 0.9865 0.9902 -0.37% -0.30% +0.9906 +0.9864 Euro/Sterling EURGBP= 0.8856 0.8860 -0.05% +0.14% +0.8872 +0.8824 NZ NZD=D3 $0.6308 $0.6327 -0.37% -0.72% +$0.6346 +$0.6299 Dollar/DollarDollar/Norway NOK=D3 10.1280 10.1765 -0.28% +3.41% +10.2150 +10.1015 Euro/Norway EURNOK= 10.8309 10.9283 -0.89% +3.21% +10.9540 +10.8050 Dollar/Sweden SEK= 10.4605 10.3427 +0.59% +0.51% +10.4796 +10.3043 Euro/Sweden EURSEK= 11.1720 11.1063 +0.59% +0.19% +11.1855 +11.0620 <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ World FX rates https://tmsnrt.rs/2RBWI5E^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
