NEW YORK (MarketWatch) -- The dollar rose to its highest level versus the euro in three weeks Friday after U.S. data on retail sales and inflation were added to a mix of positive European data and weak stocks, which left investors uncertain about the trajectory of global economic growth.
The euro had been higher earlier after data on the euro zone's economic growth came in much stronger than expected, but the shared currency gave up gains as traders determined there wasn't a great deal on the horizon to support the currency.
The U.S. data "did little to alleviate a creeping sense of pessimism over the recovery," said analysts at Action Economics.
The euro (EURUSD 1.2784, -0.0044, -0.3430%) declined to $1.2758, down from $1.2834 in late North American trading Thursday. It had fallen as low as $1.2750, the lowest since July 22.
The dollar index (DXY 82.77, +0.14, +0.17%) , a measure of the U.S. unit against a basket of major currencies, rose to 82.909, from 82.602 late Thursday.
From the early days of the financial crisis, the dollar tended to benefit from reductions in investors' willingness to hold or buy assets deemed riskier, including stocks and commodities. That flight to safety has sometimes trumped weak U.S. economic data, which would more traditionally weigh on the greenback.
The yen also traditionally benefits from safe-haven buying, but lately has been more swayed by speculation whether the government will intervene in the currency market to stem the yen's gains, which could make a recovery harder for exporters.
The dollar turned up 0.2% against the Japanese yen (USDYEN 86.1500, +0.2800, +0.3261%) to ¥86.34. The yen fell Thursday as Japanese officials attempted to jawbone the currency lower following a 15-year high against the dollar hit earlier in the week below ¥84.80.
The dollar has risen from ¥85.12 last Friday, after falling in the previous two weeks.
The Commerce Department said U.S. retail sales rose 0.4% in July, a little less than analysts had expected. Read more about July's U.S. retail sales.
The details of the report "proved weaker than the headline numbers suggested, with U.S. data continuing to reflect slowing growth conditions amidst high unemployment and low consumer confidence," said Michael Woolfolk, senior currency strategist at
BNY Mellon.
"While negative U.S. data [had been] feeding into dollar strength this week, strong European GDP data this morning, as well as position squaring going into the weekend, are likely to curb further dollar gains today," he said.
Reuters
Dollar index is on pace for its biggest weekly gain since June.
The dollar index is on pace for its first weekly gain in nine weeks, rising from 80.407 last Friday.
The euro has fallen from $1.329, its biggest decline since early May.
Separately, the Labor Department said its consumer price index rose 0.3% last month. Excluding food and energy, inflation rose 0.1%. Read more about inflation in July.
The dollar pared its gains further after the Reuters/University of Michigan index of consumer sentiment came in at 69.6 in July. See full story on the rebound in consumer confidence.
European GDP
The single currency pressed above $1.2900 in early European action, gaining after national data showed Germany's gross domestic product expanded at a robust 2.2% pace in the second quarter -- the fastest quarterly growth in 20 years and a rate that easily surpassed expectations for 1.4% expansion. Read about German GDP growth.
Germany was the overwhelming force behind a 1% quarterly increase in euro-zone GDP, which marked the strongest expansion in four years. Read about euro-zone GDP.
"Better European growth news doesn't alter the fact that the drivers of the euro's recovery against the dollar are all pretty much played out," wrote strategists at Societe Generale. See more about the U.S. trade gap.
Data are now backward-looking, according to said analysts at Interactive brokers, "and the European growth recovery has been updated in traders' mindsets. The new kid on the block remains the lingering story of the fiscal health of debt-burdened governments."
This week, the euro has been undercut by worries about the global growth outlook, which drove safe-haven flows to the dollar, the yen and the Swiss franc, strategists said. Renewed concerns about euro-zone debt woes have also played a role as worries mount over the health of Ireland's financial sector. Read about Ireland and euro-zone debt worries.
The British pound (GBPUSD 1.5599, +0.0024, +0.1541%) traded at $1.5589, from $1.5577 late Thursday.
The dollar (USDSWF 1.0506, +0.0006, +0.0572%) gained 0.5% against the Swiss franc on Friday to trade at CHF1.0548.
