* U.S. CPI stronger than expected in August
* Sept. and Dec. Fed rate-hike expectations rise
* Dollar index hits 15-day high
* Uncertainty ahead of BOJ meeting limits dollar's gains vs
(Updates to open of U.S. trading; changes byline, dateline,
By Sam Forgione
NEW YORK, Sept 16 The U.S. dollar hit a more
than two-week high against a basket of major currencies on
Friday after U.S. inflation data boosted bets on a faster pace
of Federal Reserve interest rate increases, while uncertainty
ahead of a Bank of Japan (BOJ) meeting limited the dollar's
gains against the yen.
The U.S. Labor Department said its Consumer Price Index rose
0.2 percent last month after being unchanged in July. In the 12
months through August, the CPI increased 1.1 percent, up from
0.8 percent in the year through July. The figures beat
expectations of economists polled by Reuters.
Traders' expectations of a rate hike from the Fed at its
meeting next week rose slightly to 15 percent from 12 percent on
Thursday, according to CME Group's FedWatch program.
Expectations for a December Fed rate hike rose to more than 56
percent from just over 47 percent on Thursday.
While the inflation data was not enough to convince traders
that the Fed could raise rates next week, it suggested a greater
possibility of a December move from the U.S. central bank and a
quicker pace of rate increases next year, analysts said.
"The data is just a reminder that the Fed is behind the
curve," said Greg Anderson, global head of FX strategy at BMO
Capital Markets in New York. "They may not go before the
election, but they've got some catching up to do next year."
The dollar index, which measures the greenback against a
basket of six other major currencies, rose 0.7 percent to 95.988
. The euro hit a 10-day low against the dollar of
$1.1161, while the dollar hit a 10-day high against the Swiss
franc of 0.9794 franc.
The dollar was last up just 0.11 percent against the yen at
102.21 yen ahead of the BOJ's Sept. 20-21 policy meeting.
The dollar remained within recent ranges against the Japanese
currency on uncertainty surrounding whether the BOJ will ramp up
its stimulus and whether such a move would significantly weaken
The Nikkei newspaper reported this week that the BOJ plans
to make its negative interest-rate policy the centerpiece of
future monetary easing by promising to weigh further cuts as
expansions to asset buying near their limits.
"There is still the uncertainty about what is actually going
to happen" at the BOJ meeting, said Alfonso Esparza, senior
currency strategist at Oanda in Toronto.
(Reporting by Sam Forgione; Editing by James Dalgleish)