NEW YORK- The dollar rose to a more than one-week high on Friday after a mixed batch of data showed the US economy remained stable with small pockets of weakness, suggesting the Federal Reserve could keep interest rates higher for longer or reduce the planned number of rate cuts this year.
The dollar index, which tracks the US currency against six major peers, was on pace to post a weekly gain of 0.7 percent , the largest since mid-January. The index was last flat at 103.43
Data on Friday showed a solid US manufacturing sector, with output rebounding by 0.8 percent last month after a downwardly revised 1.1 percent decline in the prior month.
Analysts at Citi, however, said in a research note that the rebound in February partly reflects the revisions lower to January output and the reversal of a “weather-related drag in January in non-durable goods manufacturing sectors.”
US consumer sentiment and inflation expectations were little changed in March, a survey showed on Friday. The University of Michigan’s preliminary reading on the overall index of consumer sentiment came in at 76.5 this month, compared to a final reading of 76.9 in February.
The survey’s reading of one-year inflation expectations, a measure tracked by the Fed, was unchanged at 3.0 percent in March. The survey’s five-year inflation outlook held steady as well at 2.9 percent for the fourth straight month.
The Fed is scheduled to meet next week and while it is not expected to make any interest rate moves, hotter-than-expected US producer and consumer price data this week has led traders to rein in bets on future cuts.
“Ahead of the meeting, there’s nothing to indicate that the Fed can afford to be dovish at this point,” said Eugene Epstein, head of structuring for North America at Moneycorp in New Jersey.
