WASHINGTON (dpa-AFX) - The U.S. dollar moved higher on Friday, extending recent gains as traders scaled down expectations for an imminent interest rate cut by the Federal Reserve after data showed U.S. consumer price and producer price inflation rose more than expected in February.
The data on consumer and producer price inflation suggest the U.S. central bank will likely hold interest rates unchanged longer than earlier thought.
Other economic data this week painted a mixed picture about the world's largest economy.
According to the CME Group's FedWatch Tool, the probability of the Fed leaving rates unchanged at its June meeting has climbed from 25% to 43.3%.
In economic releases today, a report from the Labor Department showed import prices in the U.S. increased in line with economist estimates in the month of February, rising by 0.3% in the month, after climbing by 0.8% in January.
Meanwhile, the report said export prices advanced by 0.8% in February following an upwardly revised 0.9% increase in January.
The Fed also released a report showing industrial production inched up by 0.1% in February after falling by a downwardly revised 0.5% in January.
Meanwhile, preliminary data released by the University of Michigan said the consumer sentiment index edged down to 76.5 in March after falling to 76.9 in February. Economists had expected the index to come in unchanged.
The Federal Reserve Bank of New York also released a report showing New York manufacturing activity has contracted at a significantly accelerated rate in the month of March.
The dollar index advanced to 103.49 this afternoon, gaining more than 0.1%.
Against the Euro, the dollar was down slightly at 1.0891, and against Pound Sterling, it firmed to 1.2736.
The dollar strengthened against the Japanese currency, fetching 149.06 yen a unit. Against the Aussie, the dollar firmed to 0.6561. The Swiss franc was weak against the dollar at CHF 0.8836, while the Loonie edged down slightly to C$ 1.3543 a unit of the U.S. currency.
The Fed is scheduled to announce its monetary policy on Wednesday (March 20). The central bank's accompanying statement and Chairman Jerome Powell's post meet conference are eyed for clues about the outlook for interest rates.
The Bank of England and Bank of Japan are also scheduled to make their monetary policy announcements next week.
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