The dollar rose on Friday as data indicated the resilience of the U.S. labor market, which could lead the Federal Reserve to keep interest rates elevated for a longer period. Meanwhile, the yen strengthened following a renewed acceleration in Japan's core consumer price inflation in June.
The yen increased by 0.08 percent to 139.97 per dollar after Japan's core consumer price index rose by 3.3 percent in June compared to a year earlier, matching market expectations but remaining above the Bank of Japan's target of 2 percent.
The yen fell nearly 1 percent against the dollar this week, on track to halt a two-week gain.
Meanwhile, data showed that the number of Americans filing for new unemployment benefits unexpectedly declined last week, reaching a two-month low, indicating continued strength in the labor market.
Market expectations suggest the U.S. central bank will raise interest rates by 25 basis points next week, and chances of further hikes increased following the data release.
Against a basket of currencies, the dollar rose 0.03 percent to 100.78, on track to gain 1 percent for the week. The euro gained 0.04 percent to $1.1132 after falling 0.6 percent on Thursday. The European Central Bank is expected to raise interest rates by 25 basis points on July 27, according to a Reuters poll of economists.
The Australian dollar fell 0.28 percent to $0.676, while the New Zealand dollar declined 0.34 percent to $0.621.
The data bolsters the chances of the Bank of Japan revising its inflation forecast upward in new expectations next week. Central bank meetings are scheduled for next week in Europe, Japan, and the United States as investors analyze the data to better anticipate monetary policy paths.
