U.S. dollar on course for a second straight week as investors weigh on Fed stimulus


LONDON, Aug 13 - The U.S. dollar edged higher on Friday, on track for a second consecutive weekly gain versus its major rivals, as investors weighed the possibility that Federal Reserve will reduce its stimulus in the coming weeks.

Data on Thursday showed U.S. producer prices have posted the largest annual rise in more than a decade in the 12 months through July in the U.S. - Farm Economy and Revenue.

While the data comes one day after consumer price data that indicated inflation may be peaking, analysts said producer price data helps the case for removing some of the Fed's stimulus.

The greenback held firm against a basket of its rivals against the 93 level, near an April high of 93.195, hit last week. It is up 0.2% this week after a 0.8% rise last week.

With producer prices feeding into consumer prices, this suggests that CPIs may have not yet hit a ceiling and may have increased again bets on a potential tapering announcement by the Fed in September, said Charalambos Pissouros, head of research at JFD Group.

The Fed will announce a plan to withdraw its asset purchases from the stock market in September according to Reuters's solid majority of economists polled by Reuters.

Several Fed officials came out in support of the ending of tapering bond buying in coming months, setting themselves apart from other, more dovish major central banks such as the European Central Bank and the Bank of Japan.

The dollar's strength was also supported by a mild bout of risk aversion in currency markets, with the Australian dollar and the Chinese yuan struggling against the greenback.

The Aussie stood at $0.7340, near the eight-month low of $0.72895 touched last month while the Canadian dollar eased to C $1.2517.

The euro hit $1.1734, on course for a second straight week of losses and within striking distance of a four-month high of $1.1706 on Wednesday.

Elsewhere, bitcoin climbed 4% to $46,194, nearing the three-month mark of $46,787 on Wednesday, while Ethereum rose 69% higher to $3,225.