2016.09.1613:58:00UTC+00Dollar Gaining Ground After Inflation Report Rekindles Rate Hike Hopes

The dollar is climbing against all of its major rivals Friday afternoon. The stronger than expected inflation report this morning has renewed investor hopes among some investors that the Federal Reserve may yet raise rates at its policy meeting next week.

The outlook for interest rates has been a much debated topic of late. Several Fed officials were out with hawkish comments last week, while a string of weaker than expected U.S. economic reports has cast doubt on the Fed's ability to follow through with a September rate hike. While it is becoming clear that Fed officials want to raise rates, it is still unclear whether the data is strong enough to support the decision.

The Fed is scheduled to hold a two-day monetary policy beginning next Tuesday, with its decision due to be announced next Wednesday afternoon.

Consumer prices in the U.S. increased by slightly more than expected in the month of August, according to a report released by the Labor Department on Friday. The Labor Department said its consumer price index rose by 0.2 percent in August after coming in unchanged in July. Economists had expected prices to inch up by 0.1 percent.

With an improvement in consumer expectations offset by a deterioration in views of current economic conditions, the University of Michigan released a report on Friday showing that U.S. consumer sentiment has been unexpectedly flat in September.

The University of Michigan said the preliminary reading on its consumer sentiment index for September came in at 89.8, unchanged from the final August reading. Economists had expected the index to inch up to 90.8.

The dollar has broken out to over a 1-week high of $1.1160 against the Euro Friday afternoon, from yesterday's low of around $1.1275.

Eurozone hourly labor cost grew at a slower pace in the second quarter, Eurostat reported Friday. Hourly labor costs increased 1 percent year-on-year, slower than the 1.6 percent growth registered a quarter ago.

The buck has climbed to a 3-weeh high of $1.3030 against the pound sterling Friday afternoon, from around $1.3250 yesterday.

The greenback slipped to an early low of Y101.745 against the Japanese Yen Friday, but has since rebounded to around Y102.390.