By Gertrude Chavez-Dreyfuss and Iain Withers
NEW YORK/LONDON (Reuters) -The dollar rose to a more than one-week high on Friday after a mixed batch of data showed the U.S. economy remained stable with small pockets of weakness, suggesting the Federal Reserve could keep interest rates higher for longer or reduce the number rate cuts this year.
The dollar index, which tracks the U.S. currency against six major peers, was on pace to post a weekly gain of 0.7%, the largest since mid-January. The index was last flat at 103.41.
Data on Friday showed a solid U.S. manufacturing sector, with output rebounding by 0.8% last month after a downwardly revised 1.1% decline in the prior month. Analysts at Citi, however, said in a research note 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.»
U.S. 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, were unchanged at 3.0% in March. The survey's five-year inflation outlook held steady as well at 2.9% 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 U.S. producer and consumer price data this week led traders to rein in bets on future cuts.
«The focus next week is on the Fed dots,» said Marc Chandler, chief market strategist at Bannockburn Global Forex,
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