The dollar reversed some of its earlier losses against the euro on Thursday after a report on US retail sales helped shore up the Federal Reserve's upbeat outlook on the economy.
"The number one key today was the retail sales," said Tim Mazanec, senior currency strategist with Investors Bank & Trust in Boston. Sales rose less than expected in July but June's data were revised upward.
The report "may have missed expectations, but we saw a bounce back. The consumer seems to be back and that is key as the biggest part of the economy. It shows more confidence than we saw in April, May and June," he added.
July retail sales rose 0.7 percent. Purchases excluding autos were up only 0.2 percent, their smallest gain since a decline in April. Retail sales had been expected to rise 1.1 percent. Excluding autos sales were seen up 0.4 percent.
June sales were revised to a fall of 0.5 percent, less than the previously reported decline of 1.1 percent.
"Looking ahead to the second half, (consumer spending) is what seems to be propelling the economy forward and has helped the dollar recover its losses today," Mazanec said.
The euro gained some ground on an earlier report that the Bank of Taiwan was switching some of its reserves to euros from dollars, said David Leaver, senior trader with Gain Capital in Warren, New Jersey.
Late in New York, the euro was up 0.2 percent at $1.2249. Against the Japanese currency, the dollar rose 0.3 percent at 110.89 yen.
Against the Swiss franc, the dollar slipped 0.3 percent to 1.2560 francs. Sterling fell 0.4 percent to $1.8226.
The Federal Reserve policy panel in June saw a series of "gradual or 'measured'" interest rate rises as likely ahead but acknowledged more aggressive steps may be needed, according to meeting minutes released on Thursday. The dollar's reaction was muted.
Among US data released on Thursday, the number of initial jobless claims dipped to 333,000 from 337,000 in the week ended August 7.
Expectations were for claims to rise to 338,000. The department originally reported claims in the July 31 week totaled 336,000 but it revised that number up modestly.
An unexpectedly small rise in July nonfarm payrolls knocked two cents off the value of the dollar against the euro last Friday, making investors question whether the Fed would be able to deliver further dollar-boosting rate hikes.
Traders began to brace for another slew of US economic reports due on Friday, including producer prices, trade and the University of Michigan consumer sentiment survey.
Meanwhile, oil prices in New York set fresh record highs on Thursday, topping out at $45.75 a barrel, another potential negative for the global economy.
The yen slipped across the board. Japan is vulnerable to high energy prices because it imports all its oil, economists say.
Strong growth data from the euro zone also helped the euro on Thursday.
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