FOREX-Dollar flat after inflation data and yen set for weekly gain

By Chibuike Oguh

NEW YORK, Feb 13 (Reuters) - The U.S. dollar was mostly flat against peer currencies on Friday after data showed a less-than-expected increase in inflation in January, suggesting the Federal Reserve could continue to hold rates steady in the near term.

The Japanese yen was set for its strongest weekly gain in a year.

U.S. Labor Department data on Friday showed that the consumer price index rose 0.2% last month compared with an estimate of 0.3% from economists polled by Reuters.

The euro EUR= was 0.07% lower at $1.1863 against the dollar, but was set to gain 0.4% this week. Against the Swiss franc CHF=, the dollar weakened 0.13% to 0.7684 and was on course for a weekly loss of 0.95%.

The dollar's behavior reflects market positioning as it awaits fresh central bank signals on the direction of interest rates, said Olivier Bellemare, senior derivatives trader at Monex Canada in Montreal.

"The market reaction to the data was timid at best and the moves were mostly tactical," he said.

The dollar index =USD edged higher by 0.02% at 96.95, on track to shed 0.73% for the week.

YEN CONSOLIDATES GAINS

The yen JPY= has dominated activity in the foreign exchange market this week after Japanese Prime Minister Sanae Takaichi's historic election win allayed some investor worries about the government's finances.

The yen was still headed for a gain of 2.64% for the week, its largest rise since February last year, although it was down 0.15% on the day at 153.08.

The Australian dollar AUD=, the top-performing major currency of 2026 so far after soaring in recent weeks on a hawkish Reserve Bank of Australia, was down 0.47% at $0.705, but still headed for a 0.66% gain this week.