Investing.com - The dollar edged higher against a basket of other major currencies on Friday, as demand for the greenback strengthened after data showed that U.S. consumer sentiment rose the most since July 2007 this month.
The dollar found support after the University of Michigan said, in a preliminary report, that its consumer sentiment index rose to a seven-year high of 86.4 this month from 84.6 in September. Analysts had expected the index to slip to 84.1 in October.
Earlier Friday, official data showed that U.S. building permits rose 1.5% to 1.018 million units last month, disappointing expectations for an increase of 2.8% to 1.0.29 million units, after a 5.1% drop to 1.003 million units in August.
The report also showed that U.S. housing starts rose 6.3% in September to 1.017 million units, beating expectations for a 4.8% gain. Housing starts for August were revised to a 12.8% fall from a previously estimated 14.4% decline.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, gained 0.20% to 85.19.
EUR/USD pulled away from session highs to trade at 1.2774, down 0.28% for the day.
Sentiment on the euro remained vulnerable amid growing concerns over the threat of deflation in the euro zone after revised data on Thursday showed that bloc's consumer price inflation rose by 0.3% in September, in line with expectations.
The rate has now been below 1% for 12 straight months, well under the European Central Bank's target of near but just under 2%.
The pound held steady, with GBP/USD dipping 0.01% to 1.6087 and the Swiss franc turned lower, with USD/CHF rising 0.24% to trade at 0.9449.
Meanwhile, the yen extended earlier losses with USD/JPY up 0.33% to 106.68.
The commodity-linked dollars were mixed, with AUD/USD adding 0.14% to 0.8770 and NZD/USD easing 0.04% to 0.7949, while USD/CAD slid 0.30% lower to trade at 1.1221.
The loonie found support after Statistics Canada reported that consumer price inflation rose 0.1% last month, compared to expectations for a flat reading, after a flat reading in August.
Core consumer price inflation, which excludes the eight most volatile items, increased by 0.2% in September, more than the expected 0.1% rise, after a 0.5% gain the previous month.