The dollar headed for a weekly gain against the euro and yen as a government report that showed faster US inflation prompted traders to bet the Federal Reserve will add to 16 straight interest-rate increases. The sterling's recent bullish streak has been fed largely by dollar weakness and several upbeat releases of UK data.

GBP

The sterling moved closer to the one-year high against the dollar due to positive UK retail sales, which was supported by market speculation that UK interest rates could go up. The data seems to indicate that there is still further upside to come from the sterling, with the market warming to idea of higher interest rates.

USD

The dollar's five-week losing streak against the euro may end after a report showed prices paid by consumers increased by 0.6 per cent. The data indicates a good case for the Fed to raise rates, which is lending support for the dollar.

EUR

The market anticipates that the ECB will raise interest this year by as much as one per cent, which should more than offset any monetary tightening in the US.

JPY

The yen has gained six per cent against the dollar this year on speculation the US led over Japan is narrowing. The BoJ two-day policy meeting ended with the decision to keep interest rates unchanged.

Compiled by Commercial Foreign Exchange Travelex Malta. (Free phone: 800 77 33 22) www.travelex.com.mt

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