Early trade in New York: dollar little changed, index on track for best weekly rise of 2017

The dollar was little changed on Friday after conflicting US economic data, leaving it on course for its largest weekly rise this year as an increase in expectations for inflation and interest rate hikes from the Federal Reserve boosted the currency. The dollar fell to session lows after the release of a report saying that US consumer spending barely rose in August, but that was offset by an unexpected increase in purchasing managers' index and an in-line reading on consumer sentiment.
Fed Chair Janet Yellen said earlier this week that the central bank planned to stay on its current rate-hike path, which indicated to investors an increase in US overnight interest rates in December, the third this year, and the likelihood of further hikes in 2018. Analysts said the week's rally was sparked by German elections last weekend in which the far-right Alternative for Germany won seats in parliament for the first time, leading to worries that anti-European political movements on the continent, including those in Spain and Italy, could be more worrisome than initially thought.
"Economically the situation in the US merits the fact that the dollar has gained," said Juan Perez, currency strategist at Tempus Inc in Washington. The release of the foundation of President Donald Trump's tax-reform proposal also pushed inflation expectations higher, with US Treasury yields rising to months- and years-long highs on Wednesday. The dollar index, a trade-weighted basket of the greenback against its rivals, was flat at 93.05.
It has gained more than 1 percent this week, putting it on track for its best weekly performance since December. The euro was up 0.35 percent at $1.1824, having earlier hit a three-day high against the dollar. The dollar was 0.2 percent higher against the Japanese yen at 112.56 yen.