LONDON, Dec 13: The dollar rose strongly against the euro on Thursday as the market digested stronger-than-expected US retail sales and inflation data, analysts said. Figures showed US retail sales rose by 1.2 per cent in November from October, double the 0.6pc increase expected by Wall Street analysts as consumers revved up shopping ahead of the Christmas season.This helped counter fears that the US economy could slip into recession under the weight of a housing crisis and tightening credit conditions.

“The credit crisis has clearly hit consumer confidence in recent months but that hasn’t stopped the US consumer from spending,” said Stephen Gallagher, economist at Societe Generale in New York.

Separate data showed that producer prices rose at their fastest pace in more than three decades as energy prices gained sharply.

“The dollar has been stronger after we had a run of stronger US numbers,” said Robert Minikin at Standard Chartered.

In late European trading, the euro eased to $1.4598 from $1.4702 in New York late on Wednesday.

On Friday, attention will turn to the release of US consumer price inflation figures.

If consumer price inflation mirrors producer price data, showing a sharp increase, analysts said the Federal Reserve could find itself in a dilemma.

The US central bank cut rates for the third time since September on Tuesday in an attempt to bolster the US economy as it copes with the headwinds of housing market problems and more expensive credit.

If inflationary pressures rise, this would reduce the scope for further interest rate cuts.

The dollar found some support on Wednesday on news of a plan by the central banks of the United States, the eurozone, Britain, Canada and Switzerland to jointly boost liquidity by pumping billions of dollars into the money markets where rates have risen sharply.

However, the gains were short-lived amid persistent concerns over the fallout from the US housing slump, while some analysts questioned the plan’s long-term effectiveness in resolving the credit crisis.

On Wednesday, the Fed said its plan offered a new way to inject money into the banking system following a series of steps since the credit crisis erupted in August.

In European trading on Thursday, the euro changed hands at $1.4598, against $1.4702 late on Wednesday, at 163.93 yen (164.99), 0.7161 pounds (0.7181) and 1.6680 Swiss francs (1.6685).The dollar stood at 112.28 yen (112.21) and 1.1424 Swiss francs (1.1349).

The pound was at $2.0389 ($2.0467)..—AFP