Dollar climbs as U.S. data backs December rate hike view
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Euro, Hong Kong dollar, U.S. dollar, Japanese yen, British pound and Chinese 100-yuan banknotes are seen in a picture illustration shot January 21, 2016. REUTERS/Jason Lee/Illustration/File Photo
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By Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) - The dollar rose on Friday, on track for its largest weekly gain in more than seven months against the euro, after strong U.S. retail sales and producer prices data for September reinforced expectations the Federal Reserve would raise interest rates in December.
The safe-haven yen
The dollar index, which tracks the greenback against a basket of six major currencies, added 0.3 percent to 97.788 <.DXY>. It was up 1.2 percent for the week and 2.4 percent for the month so far.
The U.S. retail sales data, which showed a 0.6 percent rise last month after declining 0.2 percent in August, supported the dollar's gains. Other data on Friday suggested a pickup in inflation, with producer prices rising broadly last month to record their biggest year-on-year increase since December 2014.
"Following a disappointing August, Fed Chair Janet Yellen will be pleased to see retail sales rebound strongly in September," said Dennis de Jong, managing director at UFX.com in Limassol, Cyprus. "Observers are increasingly confident that December will finally bring the long-awaited interest rate hike."
The minutes of the latest Fed meeting in September, released on Wednesday, prompted investors to raise their bets of a U.S. rate increase in December. Markets are now pricing in around a 70 percent chance that the Fed will hike then.
Against the yen, the dollar rose 0.5 percent to 104.28
The dollar did trim gains after a report showed that consumer sentiment, as gauged by the University of Michigan, fell this month to 87.9, the lowest since September 2015.
The euro fell 0.4 percent to $1.1015
Later on Friday Yellen will address an economics conference
(Reporting by Gertrude Chavez-Dreyfuss; Additional reporting by Anirban Nag in London; Editing by W Simon)
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