Dollar down after data but set for ninth straight weekly climb

NEW YORK: The US dollar was lower on Friday, after data showing a dip in consumer sentiment, but the greenback was still poised for a ninth straight week of gains, while the yen weakened to a 10-month low.

The University of Michigan’s preliminary reading of its Consumer Sentiment Index dropped to 67.7 this month from a final reading of 69.5 in August and below the forecast of 69.1 among economists polled by Reuters. However, consumers saw inflation lower on both a one-year and five-year basis.

Earlier data from the Labor Department showed import prices increased 0.5% last month as fuel prices jumped, but underlying price pressures stayed subdued while a separate report from the New York Fed showed factory activity picked up in the state in September.

The Federal Reserve will hold a policy meeting next week on Sept. 19-20 and the central bank is largely viewed as keeping interest rates unchanged, with a 97% expectation for no action, according to CME’s FedWatch Tool.

After edging higher earlier in the week, expectations for a 25 basis-point hike at the November meeting have declined to 30.6% from 43.6% a week ago, with a small chance of a cut being priced in as early as January.

The US dollar index was down 0.08% at 105.32, but was still poised for its ninth straight weekly gain, which would mark its longest weekly run since a 12-week streak of gains in 2014.

The greenback continued to strengthen against the yen , after the Japanese currency had a sharp move higher versus the dollar earlier in the week. The dollar was last up 0.25% at 147.84 yen after hitting a 10-month high of 147.96.

The euro was up 0.2% at $1.0666, having recovered slightly from Thursday’s six-month low of $1.0629 following the European Central Bank’s (ECB) policy announcement, in which the central bank raised rates to a record-high 4% but signaled it was likely done with hikes.

The euro was on track for a ninth straight weekly fall against the dollar.

Sterling, declined 0.2% at $1.2386. Along with the Fed, the Bank of England will also make a policy announcement next week.