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U.S. Dollar Spikes Higher As Recession Worries Fade

The U.S. dollar was higher against its most major counterparts in the European session on Friday, as the treasury yields moved off from yesterday's historic lows after strong July U.S retail sales data helped ease fears over a potential recession.

The benchmark yield on 10-year Treasury note was higher by 1.57 percent, while the rate on the 30-year Treasury bond rose 2.03 percent. Yields move inversely to bond prices.

The demand for safe-haven bonds diminished following positive comments on trade by U.S. President Trump overnight.

Trump said on Thursday that he hoped the U.S.-China trade conflict would be relatively short and hinted at a meeting in September.

Strong US retail sales helped reduce recessionary fears that created turbulence in financial markets.

Official data showed that U.S. retail sales rose 0.7 percent in July compared to a revised 0.3 percent increase in June. Economists had expected a gain of 0.3 percent.

Investors await reports on U.S. housing Starts, building permits and Michigan consumer sentiment index later in the day for more direction.

The greenback showed mixed trading against its major counterparts in the Asian session. While it rose against the franc and the yen, it was steady against the euro. Versus the pound, it declined.

The greenback climbed to 106.49 against the yen, from a low of 106.03 it touched at 8:30 pm ET. The greenback is seen finding resistance around the 108.00 level.

The greenback strengthened to an 11-day high of 0.9807 against the franc, from Thursday's closing value of 0.9764. The greenback is likely to challenge resistance around the 1.00 mark.

The U.S. currency that finished Thursday's trading at 1.1107 against the euro advanced to a 2-week high of 1.1080. The next possible resistance for the greenback is seen around the 1.08 mark.

Data from Eurostat showed that the euro area trade surplus declined in June as exports logged a monthly decline amid an increase in imports.

The trade surplus fell to a seasonally adjusted EUR 17.9 billion in June from EUR 19.6 billion in May. In the same period last year, the surplus totaled EUR 12.5 billion.

The greenback bounced off to 0.6776 against the aussie, from a 2-day low of 0.6795 seen at 11:00 pm ET. Next immediate resistance for the greenback is seen around the 0.65 level.

The greenback rose to a 2-day high of 0.6423 against the kiwi from yesterday's New York session close of 0.6447. The greenback may face resistance around the 0.62 level, if it rises again.

In contrast, the greenback declined to an 8-day low of 1.2160 against the pound, compared to 1.2081 hit late New York Thursday. Should the currency drops further, it may challenge support around the 1.27 level.

The greenback edged lower to 1.3286 against the loonie from yesterday's closing quote of 1.3313. Extension of the greenback's downtrend is likely to see it challenging support around the 1.305 level.

The U.S. housing starts and building permits for July and University of Michigan's preliminary consumer sentiment index for August are scheduled for release in the New York session.

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