Dollar stays near near record high as investors continue to wait for Fed's stimulus

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Dollar stays near near record high as investors continue to wait for Fed's stimulus

The dollar held firm on Friday, staying near its highest level in four months against a basket of currencies as investors looked for more hints from the Federal Reserve on its plans to reduce monetary stimulus.

The U.S. currency was underpinned by data released on Thursday, showing American producer prices posted their largest annual increase in the past 12 months in more than a decade.

Although the consumer price data released a day earlier indicated that inflation is peaking, wholesale price data underscored the strength of inflationary pressure, helping to support the case for removing some of the Fed's stimulus.

The dollar index dropped to 92.991, not far from Wednesday's three-month high of 93.195, which marks the dollar rise from Monday morning.

The euro eased slightly to $1.1732, on course for a second straight week of losses and staying not far from the four-month low of $1.1706 hit on Wednesday.

The Dollar changed hands to 110.42 Yen, a tad behind a one-month high of 110.80 set on Wednesday.

Sterling was a red-lining at $1.3815 after hitting a two week low of $1.3794 in the previous session and drawing little help from slightly stronger than expected GDP estimate for June. Several Fed officials came out this week in support of increasing bond buying in the coming months, setting themselves apart from other, more dovish central banks such as the European Central Bank and the Bank of Japan.

Some of the market players suspect Fed Chair Jerome Powell is more hawkish than some other board members, especially more hawkish regional Fed chiefs. A tapering announcement by the end of the year is seen as near certainty.

The focus is shifting from inflation to employment. While we still need to monitor the impact of Delta variant, if we have strong payroll growth for the next few months there should be a tapering announcement from the Fed, Naoya Oshikubo, senior economist at Sumitomo Mitsui Trust Asset Management said.

The weekly data shown Thursday's reports the number of Americans filing claims for unemployment benefits fell again last week as the recovery from COVID - 19 pandemic continued.

Easing oil prices put some pressure on commodity currencies as the International Energy Agency said the spread of the Delta variant of the coronavirus would slow the recovery of global oil demand.

The Australian dollar was $0.7342, near an eight-month low of $0.72895 touched last month while the Canadian dollar had been marginalized to C $1.2520 per U.S. unit.

Elsewhere, bitcoin slipped to $44,433, off third peak of $36,787 on Wednesday and giving up most of its gains so far this week while ether eased to $44,433, off $3,051.