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Dollar on Course for Weekly Gain; Kiwi Leaps with Inflation

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SINGAPORE Reuters The dollar headed on Friday for its best weekly gain in about a month, supported by buying on investor worries about quicker U.S. interest rate increases and by rising virus infections, while a hot inflation reading lifted the New Zealand dollar.

The kiwi was the biggest mover amongst majors in morning trade, and was last up 0.4 at 0.7003, after consumer prices rose far faster than expected at a decadehigh pace of 1.3 for the June quarter and 3.3 for the year.

The reading has brought forward rate hike expectations to next month, with markets now pricing an 86 chance the Reserve Bank of New Zealand becomes the first developedmarket central bank to exit from emergency policy settings.

Still, against a firm greenback, even that startling prospect has so far failed to rouse the New Zealand currency from recent ranges, and for the week the kiwi is up just 0.1.

The dollar was broadly steady elsewhere on Friday but heading for weekly gains, with a rise over the week so far of 0.5 against the euro, about the same against sterling and a little more, at 0.9, against the Australian dollar.

Clearly the U.S. dollar has got some power behind it, and I think thats holding back all the majors, said Westpac strategist Imre Speizer.

Theres an interest rate side to it, and sometimes its a safehaven bid…we do feel that the U.S. dollars going to be quite strong over the next few months, he said, as strong U.S. data feeds in to higher yields and rateincrease…

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