The dollar recovered from early weakness against the safe-haven yen as better-than-expected US retail sales data on Thursday eased fears that the US economy could be headed for a recession. The Japanese yen, which tends to benefit during geopolitical or financial stress as Japan is the world's biggest creditor nation, has strengthened about 0.3% against the dollar this week as investors reached for safety.
The yen started the day strong against the dollar as investors fretted over this week's economic data from China and Germany that revealed the extent of the damage the China-US trade dispute is causing to the world economy. The Japanese currency advanced sharply against the greenback on Wednesday after the first inversion in the US Treasury yield curve in 12 years sparked heightened fears of an imminent end to the longest economic expansion in US history.
However, the yen retreated against the greenback on Thursday after data showed US retail sales surged in July, helping assuage financial markets' fears that the US economy was heading into recession.
"With the rest of the world sliding into the abyss, the July retail sales figures show a resurgent US consumer riding to the rescue once again," Michael Pearce, Senior US Economist at Capital Economics said in a note.
The dollar was up 0.27% against the yen. The dollar index, which tracks the greenback versus the euro, yen, sterling and three other currencies, was up 0.18% at 98.166, close to a two-week high.
Elsewhere, Norway's crown weakened after its central bank, the Norges Bank, said its policy outlook was now more uncertain, raising doubts about whether it would raise rates later in 2019. The crown slipped to a near 18-year low against the US dollar.
The Australian dollar was up 0.44% to $0.6777 after data showed the Australian economy had added a forecast-busting 41,100 new jobs in July.
Sterling rose 0.46% against the dollar, helped by better-than-expected retail sales and news that Britain's opposition Labour Party has begun its bid to bring down Prime Minister Boris Johnson and stop him from taking Britain out of the European Union without a deal.
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