NEW YORK (CNNMoney.com) - Treasury prices fell in thin trading Friday on a better-than-expected consumer sentiment report and wholesale inventory figures as investors awaited the Federal Reserve's policy meeting next week.

The dollar rose against the yen and was up slightly against the euro.

The benchmark 10-year note lost 17/32 to 99-23/32 to yield 4.53 percent, up from 4.46 late Thursday. The 30-year bond fell a whole point to 109-09/32 to yield 4.73 percent, up from 4.66 in the previous session. Bond prices and yields move in opposite directions.

In shorter-dated debt, the two-year note decline 3/32, yielding 4.42 percent, while the five-year note slipped by 9/32, yielding 4.44 percent.

Bonds retreated following a report by the University of Michigan which showed December consumer sentiment figures rose ahead of expectations due to lower gas prices and expanding job growth.

The December index climbed to 88.7 from November's reading of 81.6. Economists polled by Reuters on average had predicted an increase to 85.5.

"It was a solid report that fits in with some of the other signs that the economy is strong," one trader with a primary Treasuries dealer on Wall Street told Reuters.

October wholesale inventories figures also weighed on Treasury prices as the government reported a smaller-than-expected increase of 0.2 percent in October, its leanest level of inventory relative to sales on record.

After a week of seesawing bond prices, investors are biding their time before next Tuesday's Federal Open Market Committee meeting, with the central bank widely expected to raise the benchmark rate another quarter point to 4.25 percent.

"We're just marking time before the Fed meeting," Alan De Rose, a bond trader with CIBC World Markets in New York told Reuters.

The Federal Reserve has hinted that its monetary-tightening campaign may soon come to an end, but investors believe the future direction of the central bank's monetary tightening campaign will be determined by whether the word "measured" is dropped from the meeting statement.(Click here for the full story.)

Since last June, the Fed has raised its benchmark short-term rate 12 straight times and brought rates to 4 percent -- a four-year high -- to fight the ravages of inflation.

Inflation hurts bonds as it erodes the value of the fixed-income investment. If the Fed raises rates and issues a statement that implies its money-tightening campaign is not over, it could signal that inflation is still seen as a threat.

On the other hand, rising interest rates generally help the dollar as they make dollar-denominated securities more attractive to foreign investors.

In currency trading, the dollar has rallied about 14 percent against the euro and 18 percent against the yen this year, fueled largely by rising interest rates.

The euro bought $1.1815, down slightly from $1.1817 late Thursday, while the dollar bought ¥120.62, up from ¥120.27.

-- from staff and wire reports

_______________

For updated bond charts, click here.