Dollar braces for US inflation reading, yen gains on BOJ comments

The U.S. dollar held firm on Thursday in the lead up to U.S. inflation data that could ruffle the interest rate outlook, while the yen found its footing after comments from Bank of Japan official hinted at the need to exit ultra-easy policies. The yen has been squeezed because investors see short-term rates near zero in Japan and stubbornly high U.S. and European interest rates – driving selling in the Japanese currency in order to earn better returns almost everywhere else. The yen is down 2% on the dollar in February and 2.7% on the euro – its largest monthly slide on the common currency since last June which has carried it to three-month lows.