The Chinese yuan fell after data showed retail sales grew in November at their slowest pace since 2003 and industrial output rose the least in nearly three years. The offshore yuan shed 0.38 percent at 6.9038 per dollar. The euro weakened as the euro zone economy showed more signs of a slowdown.
Sterling tumbled as traders worried British Prime Minister Theresa May was struggling to secure assurances from the EU over her Brexit withdrawal deal.
“The dollar is not so much rallying as much as everyone else is falling,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York. An index that tracks the greenback versus six major peers hit its highest level since May 2017 at 97.711. At 11:02 a.m. (1602 GMT), it was up 0.49 percent at 97.536. The greenback’s appeal increased in the aftermath of upbeat data on domestic retail sales and industrial output.
The dollar’s gains were limited by bets the Federal Reserve might reduce the number of interest rate increases after a widely expected hike next week. The futures market implied traders saw an 82 percent chance the U.S. central bank would increase key short-term rates by a quarter point to 2.25-2.50 percent at its policy meeting next Tuesday and Wednesday, up from 79 percent on Thursday, according to CME Group’s FedWatch program.
“The market is skeptical about the U.S. economy and whether the Fed would hike further after December,” Schlossberg said.
The greenback was also held back by the probability of a partial government shutdown as U.S. President Donald Trump and federal lawmakers disagree over funding for a border wall, analysts said. The euro was down 0.5 percent at $1.12965 after German data showed private-sector expansion slowed to a four-year low in December. French business activity unexpectedly contracted, further fanning fears about slowing growth in the euro area.
Worries about the European economy were also stoked by uncertainty whether May could convince the British parliament to approve her Brexit deal. The pound was 0.79 percent lower at $1.256, holding above a 20-month low of $1.2477 reached on Wednesday.