The dollar index (DXY00) on Friday fell by -0.01%. The dollar on Friday gave up an early advance and finished slightly lower. The euro moved higher Friday and weighed on the dollar after the 10-year German bund yield climbed to a 2-1/2 month high, strengthening the euro’s interest rate differentials. The dollar on Friday initially moved higher after the stronger-than-expected U.S Jan PPI report pushed up bond yields and pushed back expectations for Fed interest rate cuts.
Friday’s U.S. economic reports were mixed for the dollar. On the bearish side, Jan housing starts unexpectedly fell -14.8% m/m to a 5-month low of 1.331 million, weaker than expectations of no change at 1.460 million. Also, Jan building permits, a proxy for future construction, unexpectedly fell -1.5% m/m to 1.470 million, weaker than expectations of an increase to 1.512 million. Conversely, Jan PPI final demand eased to +0.9% y/y from +1.0% y/y in Dec, stronger than expectations of +0.6% y/y. Also, the University of Michigan U.S. Feb consumer sentiment index rose +0.6 to a 2-1/2 year high of 79.6.
