Expected Fed rate hike boosts US dollar

The US dollar kept upward momentum on Friday with moderate gains against the other major currencies except the yen, benefiting from expectations of higher US interest rates that would attract more capital.

The euro eased to US$1.2148 at 9pm GMT from US$1.2173 late Thursday in New York. The US dollar eased back to ¥110.42 from ¥110.52 on Thursday as the Japanese currency found support from data that showed foreign investors continue to snap up Japanese equities.

The US currency appeared to get a second-day boost from a strong US regional factory report, seen as further confirmation that higher interest rates are in store for the world's largest economy.

Taken a whole, the week's US data -- including mixed signals on inflation -- were seen by currency traders as keeping the Federal Reserve on course with incremental interest-rate hikes through the end of the year and possibly into next year.

"With core inflation having been relatively stable over the past year, we suspect that the economy is now operating at close to full employment," said Deutsche Bank economists Peter Hooper and Joseph LaVorgna in a note.

In late New York trade, the dollar stood at 1.2755 Swiss francs from SF1.2711 on Thursday.

The pound was being traded at US$1.7943 after US$1.7947 late on Thursday.