Investing.com – The U.S. dollar rose slightly on Friday, on track to snap a five-week losing streak ahead of key inflation data.

At 04:00 ET (09:00 GMT), the dollar index, which tracks the U.S. currency against a basket of six other currencies, was up 0.1% at 101.314, after rising to its highest level since Aug. 22 of 101.58 on Thursday.

Dollar at weekly growth rate

The dollar is on track to gain 0.6% this week, which would be its best week since early April, helped by continued signs of resilience in the U.S. economy after gross domestic product data showed the economy grew more than previously estimated in the second quarter.

However, the U.S. currency is still expected to fall about 2.5% in August, which would be its worst month since November, as investors factored in the start of the Federal Reserve’s rate-cutting cycle.

Speaking at the Federal Reserve’s annual meeting last week, Federal Reserve Chairman Jerome Powell praised recent progress in the fight against inflation and said “now is the time to adjust policy.”

Markets saw that as a near-certainty for a rate cut at next month’s meeting. It would be the first such cut in more than four years.

However, there are still ongoing discussions about the scale of the cuts, as well as the pace of future cuts.

The Federal Reserve’s preferred inflation measure will be released later in the session and could add more insight to this debate.

Eurozone inflation is falling

In Europe, the indicator rose 0.1% to 1.1092, after the release of the eurozone consumer inflation indicator in August confirmed signs of a slowdown in inflation.

It rose 2.2% year-on-year in August, down from 2.6% in the previous month, and was up 0.2% month-on-month.

The rate cuts began in June, and a piercing drop in inflation is likely to prompt policymakers to cut rates further next month.

rose 0.2% to 1.3188, nearing its highest level since March 2022, supported by expectations that the Bank of England will keep interest rates high for longer than those in the United States and the eurozone.

A 25 basis point rate cut from August 1 to 5% and money markets are pricing in a further 40 basis point cut by the end of the year.

Yen close to recent highs

In Asia, the rate stabilized at 145.01, close to the lows seen in early August when the yen was at its peak.

Tokyo data showed inflation rose slightly more than expected in August, with core inflation returning to the Bank of Japan’s annual target of 2% on improved private spending.

The reading reinforced the view that rising inflation will give the BOJ more room to raise interest rates even further this year. The CPI reading also helped markets look beyond disappointing industrial production and retail sales prints.

fell 0.1% to 7.0907, reaching its lowest level since overdue December.

The yuan, like broader Chinese markets, rose on reports that Beijing plans to refinance $5.4 trillion worth of mortgages, giving a boost to the property market that has been a major cause of China’s economic crisis.