TOKYO, Oct 13 (Reuters) - The dollar held firm on Friday after stronger-than-expected U.S. consumer inflation revived prospects that the Federal Reserve will have to keep rates higher for longer.
Meanwhile, the yuan and the Australian and New Zealand dollars weathered a bout of weak consumer and producer price data out of China, as trade numbers declining at a slower pace offered some hope of stabilisation.
The dollar received support after data showed on Thursday that U.S. consumer prices were pushed higher by a jump in rental costs in September. Although a steady moderation in underlying inflation pressures buoyed expectations that the Fed would not hike interest rates next month, the data did raise the chance of rates staying elevated for some time.
"CPI data for September reveal further challenges with the 'last mile' in pushing inflation persistently back towards the (Fed's) 2% target," said David Doyle, Macquarie head of economics, in a note.
The dollar index, which measures the U.S. currency against six of its major peers, ticked down slightly to 106.38 during Asian hours, just off Thursday's high of 106.6.
The boost to the greenback overnight saw the yen sliding back toward the sensitive 150-line briefly touched last week.
The exchange rate was sat at 149.62 yen per dollar , with traders on guard for potential intervention by Japanese authorities to support their currency should it weaken further.
"Dollar/yen remains restrained below 150 amid concerns that the authorities could lean against excessive JPY weakness," said Wei Liang Chang, foreign exchange and credit strategist at DBS.
The euro ticked up nearly 0.2% to $1.0549 after taking a tumble overnight against the dollar, while sterling was last trading over 0.2% higher at $1.2202.
Investors also digested producer and consumer prices data out of China on Friday that showed deflationary pressures were slightly stronger than expected.
"What we've got is a fairly weak growth story (from China), and that's weighing on the price numbers," said Rob Carnell, regional head of research in the Asia-Pacific region at ING.
He added that the government could feel pressure to offer further support to the economy, albeit limited.
Bloomberg News reported earlier in the week that China is considering raising its budget deficit for 2023 as the government prepares to unleash a new round of stimulus to help the economy meet the official growth target.
China's trade data for September, meanwhile, showed exports and imports both shrank at a slower pace for a second month, providing some encouragement to authorities.
The offshore Chinese yuan stayed mostly flat versus the greenback at $7.3061 following the data.
The Australian dollar, which often trades as a proxy for China growth, last sat at $0.6317.
The kiwi eased 0.2% to $0.5915.
(Reporting by Brigid Riley Editing by Shri Navaratnam; Editing by Simon Cameron-Moore and Miral Fahmy)
