SINGAPORE, Sept 13 (Reuters) - The dollar began a busy data week on a firm footing, with immediate focus turning to U.S. inflation figures but investors are also wary of the Federal Reserve priming to exit from its super-supportive policy stance even as COVID-19 cases surge. The greenback inched higher in Asia after logging its best week in three on Friday, benefiting both from safety flows and the policy outlook lifting U.S. Treasury yields. Moves were modest but the euro fell back under $1.18 to $1.1792. The dollar also made small gains on the Australian and New Zealand dollars and marginal rises against the yen and sterling -- last buying 109.96 yen. “A couple of dynamics favour the dollar,” said Rodrigo Catril, senior currency strategist at National Australia Bank in Sydney, noting growing risk aversion as even highly vaccinated countries such as Singapore and Britain log surges in COVID-19 cases. “Re-opening still faces challenges from the consumer, who is cautious and from bottlenecks which restrict ability for the economy to rebound with some gusto,” he said. “At the same time rising infections suggest we may still need to reintroduce restrictions of some sort. The other thing is that the Fed continues to signal that tapering is coming.”By 0520 GMT the Australian dollar was 0.2% weaker at $0.7337 -- and it has struggled to hold over $0.74 -- while the kiwi was down 0.4% at $0.71 as a lockdown of Auckland was extended until midnight on Sept. 21. The dollar index rose 0.1% to 92.739. U.S. consumer price data on Tuesday is the next major focus for FX traders, along with U.S. retail sales and production figures later in the week as they frame the economy’s progress in the lead-up to the Federal Reserve’s Sept. 21-22 meeting. Core consumer price inflation is expected to slow a tad to 4.2%. However, with Philadelphia Fed President Patrick Harker, in a Nikkei interview here on Monday, joining a chorus of policymakers keen to begin scaling back asset purchases, bond traders seem to think a slowdown won"t be enough to delay tapering much. Ten-year Treasuries were sold for a third straight week last week - the longest streak since yields lurched higher in February and March. The 10-year yield was last at 1.3326%. “My baseline forecast is still to have inflation around 4% this year, ending this year, and then starting to fall back to 2% over the years 2022 and 2023. However, I do see elevated risk that inflation could run higher,” Harker told the Nikkei. “I’d like to start the taper process soon, so that we can finish the tapering process, so if we need to increase the policy rate, we have the room to do that. And I think we need to buy ourselves that option.” Also ahead on the calendar are Chinese economic data, likely to highlight wobbly retail sales on Wednesday and further add to concerns about the world’s second biggest economy. The yuan slipped slightly to 6.4550 per dollar, in line with stocks following news of Beijing’s latest regulatory measures aimed at the tech sector. Those steps included a reported breakup of Ant’s Alipay and new protections for workers at ride-hailing and delivery firms. Elsewhere, sterling fell 0.1% to $1.3816 while cryptocurrencies were under pressure. Bitcoin fell 3% to $44,637 and has struggled to find traction above its 20-day and 200-day moving averages.
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