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London - The dollar snapped a three-day decline after retail sales data boosted the outlook for the US economy.
The currency rose against most of its major peers after reports showed sales at US retailers rose more than forecast last month, while the consumer-price index climbed 0.2% for a second month.
Improving growth prospects help to bolster the case for the Federal Reserve to raise interest rates sometime this year, with traders pricing in higher odds of a hike on Friday after the figures were released.
"This data pretty is solid," said John Hardy, head of foreign-exchange strategy at Saxo Bank in Hellerup, Denmark. That’s going to keep the dollar resilient, he said.
More scope for the Fed to raise rates rekindles speculation of increased dollar allure based on tighter monetary policy in the US while central banks in Europe and Asia add to stimulus.
That sentiment fuelled a 20% gain the dollar the past two years before the greenback slumped this year as the outlook for divergence dwindled.
The Bloomberg Dollar Spot Index rose 0.1% as of 8:44 a.m. in New York, halting a three-day decline.
The dollar gained 0.1% to $1.1111 per euro and was 0.6% higher at ¥106.01.
