LONDON, Nov 14 - The dollar extended this week's losses to three-week lows on the euro on Friday and neared a recent three-year trough versus the yen as investors braced for a slew of U.S. data for clues about the strength of recovery. U.S. retail sales, industrial production and consumer sentiment are due later in the day. The greenback has taken a beating this week as growing unrest in Iraq, trade tensions and lacklustre data fuelled concerns about the U.S. twin deficits and led investors to scale back dollar positions after a strong two-week rally. U.S. equity markets have had a bumpy week and failed to make new highs, adding to dollar woes. "The market is undecided and not committed to one view or another, but structural and cyclical factors continue to affect the dollar," said Stephen Jen, chief currency economist at Morgan Stanley. "We've had a slight change in sentiment for the U.S. since last week. There is distinct deterioration in how the U.S. is expected to perform in months ahead and there is a view that growth now is borrowed from future. (Data this week) also reminded people of U.S. financing problems." By 1045 GMT, the dollar had fallen half a percent on the day to $1.1799 per euro , within 1-1/2 cents of a record low set earlier this year.
Against the yen it had fallen to 107.99 , within striking distance of a three-year low set earlier this month. The New Zealand dollar hit a fresh six-year high against the U.S. dollar at US$0.6320 , driven by doubts about the greenback, attractive yields and rising commodity prices. In the euro zone, third quarter gross domestic product data beat forecasts and showed the region grew at its fastest pace in year, at 0.4 percent on the quarter. The euro took the news in its stride after data showed earlier that Italy had swung back into growth in the third quarter at a stronger than expected pace of 0.5 percent and better than expected growth figures out of Germany and France on Thursday.
DATA WATCH
Economists expect U.S. retail sales, due at 1330 GMT, slipped 0.2 percent in October overall, but rose 0.2 percent over the previous month excluding auto sales. Industrial production, at 1415 GMT, is expected to rise 0.3 percent in October after a 0.4 percent gain in September. The University of Michigan preliminary consumer sentiment measure for November is expected to rise to 91.0 from 89.6 a month ago. Lacklustre U.S. weekly jobless claims and a widening trade gap aided further falls in the dollar on Thursday and highlighted the United States' need to attract enough investment to plug the gap and offset downward pressure on the dollar. "There's ongoing pressure on the dollar. We had softer than expected data yesterday and in the background an intensification of geopolitical risks although that hasn't yet led to a substantial risk aversion," said Mitul Kotecha, senior currency strategist at Credit Agricole Indosuez. U.S. stocks ended Thursday slightly weaker and U.S. stock futures were pointing to a steady start later on Wall Street.
Federal Reserve chairman Alan Greenspan gives the opening remarks at a conference in Washington at 1400 GMT and will be followed later with a speech from European Central Bank chief economist Otmar Issing. Japan also had better-than-expected gross domestic product growth of 0.6 percent for the July-September quarter on robust growth in net exports and capital expenditure. The data firmed the yen against the dollar but its strengthen proved a dampener for Tokyo stocks, which fell 1.65 percent. This in turn helped cap the yen's rise by the end of Asian trade. Japan's top financial diplomat, Zembei Mizoguchi, said on Friday that the U.S. economy was still stronger than Japan's despite the latest growth data and said authorities would be on the alert for any overshooting in the currency market.//