Kevin Buckland, TOKYO, November 12 - The U.S. dollar headed for its best week in almost five months against major peers on Friday, amid bets for earlier Federal Reserve interest rate hikes after data this week showed the fastest U.S. inflation in three decades. The dollar index, which measures the currency against six peers, hit a new 16 month high of 95256, on track for a 1.08% gain this week, the most since the period ended June 20. The euro went back to a 16 month low at $1.1439, and sterling dropped to $1.33565, its weakest level this year. The Fed's contention that price pressures will be transitory and a speculation that policymakers would lift interest rates sooner than previously thought was questioned by a broad-based rise in U.S. consumer prices last month. Markets price a first rate increase by July and another by December. We still think market pricing has room to firm further, especially in 2023, which can further supportUSD, the strategist of the Commonwealth Bank of Australia, Kimberley Mundy, said in a client note. By contrast, interest rate futures are too aggressive in pricing in European Central Bank rate increases for next year considering ECB policymakers are not budging from their ultra-dovish guidance, giving scope for further euro weakness, she said. Traders will be watching inflation readings from a University of Michigan survey, along with JOLTS job openings data later in the global day. New York Fed President John Williams speaks at an online conference that could show a glimpse of how policymakers are responding to the red-hot inflation print. The chief economist of European Central Bank, Philip Lane, speaks at a panel at a separate event. The dollar rose to a one-week high on Friday, a one-week peak. It touched a 2 week high of 0.9224 Swiss franc for a second consecutive day. The Swiss National Bank governing board member Andrea Maechler said at an event late on Thursday that the Swiss Franc remained in demand as a safe haven investment with market uncertainties raised due to the ongoing COVID-19 epidemic. The risk-sensitive Australian dollar dropped as low as $0.7283 for the first time in more than a month. The New Zealand dollar dropped as low as $0.7005, a level not seen since Oct. 14.