TOKYO (Reuters) - The dollar took a breather on Friday but looks set to post weekly gains against a basket of currencies as investors try to assess the risk of U.S. inflation rising faster than expected and prodding the Federal Reserve to hike interest rates sooner. A strong reading on U.S. wholesale prices and jobless claims on Thursday failed to spark a renewed uptick in Treasury yields, which some traders put down to the market already pricing in a degree of inflation worries. Moreover, the Federal Reserve has been sticking to its script that its stimulus will be in place for some time to support the economy, with officials viewing a spike in inflation as transitory. All the same, given the U.S. economic normalisation is gathering steam, market players say underlying inflation concerns will remain for now. “Inflation will remain a big theme for markets in coming few months. The Fed says it will be transitory but markets are asking ‘what if it turns out not to be transitory,” said Yukio Ishizuki, senior strategist at Daiwa Securities. In early Friday trade, the dollar index paused at 90.752, sitting on a gain of 0.5% so far this week and keeping some distance from its 2-1/2-month low of 89.979 set on Tuesday. Against the yen, the dollar stood at 109.50 yen, off Thursday’s one-month high of 109.785. The euro was fetching $1.2076, holding above Thursday’s low of $1.20515 while the British pound changed hands at $1.4047. The U.S. producer price index rose 0.6% in April after surging 1.0% in March. In the 12 months through April, the PPI shot up 6.2%. That was the biggest year-on-year rise since the series was revamped in 2010 and followed a 4.2% jump in March. A separate report showed the number of Americans filing new claims for unemployment benefits dropped to a 14-month low of 473,000. Strong data, coming after a stunning jump in consumer inflation announced on Wednesday, added to the evidence inflationary pressure is building up in the United States as vaccine rollouts prompts economic normalisation. On Thursday, however, U.S. bond yields dipped, with the 10-year Treasuries yield slipping to 1.651% after hitting a five-week high of 1.707%. In crypto currencies, bitcoin flirted with 2-1/2-month lows after Tesla Inc chief Elon Musk reversed his stance on accepting the digital currency and on news of a U.S. probe into Binance, one of the world’s biggest cryptocurrency exchanges. The world’s biggest cryptocurrency last traded at $49,222, having fallen to as low as $45,700 on Thursday, its lowest level since March 1. The second-biggest cryptocurrency ether dropped to $3,656, off a record high of $4,380.64 hit on Wednesday. Moving in the opposite direction, dogecoin, a relatively new coin promoted by Musk, jumped as much as 20% after he said he was involved in work to improve the token’s transaction efficiency. Reporting by Hideyuki Sano; Editing by Shri Navaratnam Our Standards: The Thomson Reuters Trust Principles.