* Dollar index wallows at three-week lows
* U.S. consumer spending and weekly jobless claims
* Euro looks to GDP, Aussie eyes China inflation data
By Ian Chua
SYDNEY, Feb 14 The U.S. dollar was pinned at
three-week lows against a basket of major currencies early on
Friday after disappointingly soft U.S. data dealt a blow to the
already struggling greenback.
U.S. retail sales fell unexpectedly in January and more
Americans filed for jobless benefits last week, the latest signs
the world's biggest economy started the year on a softer footing
as bad weather took its toll.
The dollar index slid to a low of 80.194, reaching a
level last seen on Jan. 24. It has since crept up to 80.296.
Against the yen, the greenback dipped to 102.18 from
Thursday's high of 102.58, while the euro climbed to a near
three-week peak of $1.3692.
The dollar's decline came as U.S. Treasury yields fell.
Oddly, Wall Street recovered and closed higher as some investors
looked past the disappointing data, chalking the weakness up to
weather instead of weaker fundamentals.
The euro barely reacted to news that the Italian prime
minister will resign on Friday, opening the way for the
country's third administration in a year.
Instead, investors are keenly awaiting fourth quarter growth
data out of the euro zone later in the day. Analysts polled by
Reuters expect slightly faster growth in the 17-nation economy.
"After ECB President (Mario) Draghi specifically pointed to
Q4 GDP as a key piece of incoming evidence on the economy, the
report should be watched closely today," analysts at BNP Paribas
wrote in a note to clients.
Last week, Draghi put markets on alert for possible policy
action in March.
Any positive news on growth, however, is still likely to be
offset by persistently low inflation, which will be key for
further ECB easing and a weaker euro, BNP analysts said.
The standout currency overnight was sterling which climbed
to its highest in nearly three years against the greenback. It
hit $1.6675, taking total gains this week to more than
The soft U.S. data stood in stark contrast with the Bank of
England's much more upbeat outlook for the British economy which
helped lift the pound this week.
Also in focus is the Australian dollar after it dropped one
full U.S. cent on Thursday in the wake of surprisingly weak
labour data. It touched a low of $0.8928 before clawing
back half its losses to be within reach of 90 U.S. cents.
Reserve Bank of Australia (RBA) Assistant Governor
Christopher Kent on Friday played down the disappointing jobs
data saying unemployment tended to lag economic activity.
The near-term focus for the Aussie is inflation data out of
China, Australia's main export market. The Aussie is often used
as a liquid proxy for China plays. The data is out
later on Friday.