Investing.com - The dollar gained ground on Friday as solid data on U.S. retail sales and producer prices bolstered expectations that the Federal Reserve could raise interest rates in the coming months.
U.S. retail sales rose 0.6% in September after declining 0.2% the previous month, data from the Commerce Department showed Friday.
Another report showing that U.S. producer prices picked up broadly last month added to the view that the economy is on a strong enough footing for a rate hike by the Fed before the year’s end.
The reports came after the minutes of the Fed’s September meeting, published on Wednesday, showed several officials believed it would be appropriate to raise interest rates "relatively soon" if the economy continued to improve.
The U.S. central bank raised rates for the first time in almost a decade in December, but rates have remained on hold since then amid concerns over sluggish inflation.
The Fed’s next meeting is in November, but a rate hike ahead of the presidential election is seen as unlikely.
Expectations for higher rates typically boost the dollar by making it more attractive to yield seeking investors.
Investors currently price a 64% chance of a rate hike at the Fed's December meeting; according to federal funds futures tracked Investing.com's Fed Rate Monitor Tool.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.56% at 98.08 late Friday. For the week, the index gained 1.4%.
The euro was weaker, with EUR/USD down 0.78% at 1.0971.
The yen was also lower, with USD/JPY advancing 0.43% to 104.15.
Sterling remained on the back foot, with GBP/USD down 0.55% at 1.2186 and the week down 2% after a more than 4% decline in the previous week as concerns around the prospect of a ‘hard Brexit’ continued to weigh.
In the week ahead, investors will be focusing on the European Central Bank’s post policy meeting press conference on Thursday amid speculation over whether it will further expand its stimulus program in the face of sluggish growth and inflation.
Market watchers will also be looking to Chinese figures on third quarter GDP, due for release on Wednesday, with the rate of growth expected to ease again.
Ahead of the coming week, Investing.com has compiled a list of these and other significant events likely to affect the markets.
Monday, October 17
The euro zone is to publish revised data on inflation.
The U.S. is to release reports on industrial production and manufacturing activity in the New York region.
ECB President Mario Draghi is to speak at an event in Frankfurt.
Fed Vice-Chair Stanley Fischer is to speak in New York.
Tuesday, October 18
Reserve Bank of Australia Governor Phillip Lowe is to speak in Sydney.
The RBA is to publish the minutes of its latest monetary policy meeting, giving investors insight into how officials view the economy and their policy options.
New Zealand is to release inflation data.
The U.K. is to publish its monthly inflation report.
Canada is to report on manufacturing sales.
The U.S. is to release inflation figures.
Wednesday, October 19
China is to publish data on third quarter economic growth and industrial production.
The U.K. is to release its monthly employment report.
The U.S. is to produce data on building permits and housing starts.
The Bank of Canada is to announce its benchmark interest rate and publish its rate statement, which outlines economic conditions and the factors affecting the monetary policy decision. The announcement is to be followed by a press conference.
Thursday, October 20
Australia is to release its latest jobs report, as well as private sector data on business confidence.
The U.K. is to report on retail sales.
The ECB is to announce its benchmark interest rate. The policy meeting is to be followed by a press conference with President Mario Draghi.
The U.S. is to produce data on jobless claims, existing home sales and manufacturing activity in the Philadelphia region.
Friday, October 21
The U.K. is to release data on public sector borrowing.
Canada is to round up the week with reports on retail sales and inflation.