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Dollar Edges Higher on Signs Consumer Remains in Good Shape

By Yasin Ebrahim

Invesing.com – The dollar edged higher Thursday as better-than-expected U.S. retail sales suggested the consumer will continue to keep the economy on solid footing.

The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.10% 97.33.

The Commerce Department said that core retail sales rose 0.7% last month, topping economists’ forecast for a 0.5% rise. The retail sales control group – which has a larger impact on U.S. GDP – rose 0.5%, above expectations for a 0.4% rise.

Some have warned, however, that the economy will need to be proped up by other sectors.

"The consumer, the cornerstone of the economy, while proving more resilient than originally expected will likely prove incapable of alone supporting the economy – at least indefinitely – without assistance from other key areas such as business investment and manufacturing," Stifel said.

As well as firmer retail sales, lower-than-expected jobless claims and stronger manufacturing data supported sentiment on the greenback.

Elsewhere, sterling found its footing against the dollar, staying above the $1.30 handle. The pound wobbled earlier this week as weaker U.K. economic data strengthened calls for a Bank of England rate hike.

Traders are expected to look to the purchasing managers' surveys on Jan. 24 for the first sign of how the U.K.'s economy performed following December's general election.

EUR/USD fell 0.12% to $1.114 as in-line inflation data from Germany did little to ease worries about the slow pace of growth in eurozone's largest economy.

USD/JPY rose 0.23% to Y110.14, with the yen under pressure as demand for safe havens slipped following the signing of the U.S.-China phase one trade deal a day earlier.

USD/CAD rose 0.07% to C$1.305, though gains were kept in a check as uptick in oil prices supported the loonie.

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