Dollar Gaines Against The EURO After Strong US Data

The dollar gained more ground against the euro on Friday after strong U.S. data suggested that the Fed may not need to act again soon to cut interest rates, which would have lowered the yield on dollar-denominated investments.

The British pound dropped to $2.0154 from $2.0387 in New York, while the dollar rose to purchase 113.42 Japanese yen from 112.20 yen the night before.

The U.S. currency rose to 1.1533 Swiss francs from 1.1413 francs, and fell to 1.0187 Canadian dollars from 1.0207 Thursday.

U.S. consumer inflation surged by the largest amount in more than two years in November, led by gasoline prices. Earlier the Fed had cut rates by a less-than-expected quarter point, but the strong pricing report suggests the Fed may not feel as inclined to cut rates in order to keep inflationary pressures in check. That would keep the dollar's yield relatively strong compared with those of other currencies.

The U.S. Labor Department said its closely watched Consumer Price Index rose 0.8 percent last month, the biggest one-month increase since a 1.2 percent surge in September 2005.

Meanwhile, the Federal Reserve reported that industrial production rebounded in November, rising by 0.3 percent after having fallen by a sharp 0.7 percent in October. The gain was slightly higher than had been expected.

The dollar was also helped by a report from Germany's Federal Statistics Office that consumer prices had risen 3.1 percent in November compared with a year ago, and were up half a percent from October to November.

The figures were likely to weigh on the European Central Bank as it considers whether to change interest rates in the euro zone. The benchmark rate is currently 4 percent, but many analysts believe it is likely to be lowered in 2008.

Also providing support for the dollar was a report Thursday by the U.S. Commerce Department that said retail sales jumped by 1.2 percent last month, double the gain economists had expected. It was the biggest increase in six months and followed a much weaker 0.2 percent rise in retail sales in October.