The US dollar slid against the euro and pound on Friday as US retail sales unexpectedly dropped last month and inflation at the wholesale level fell more sharply than expected.
The two reports could give the the US Federal Reserve more incentive to cut rather than raise interest rates.
The 15-nation euro jumped to US$1.4215 in late trading in New York from US$1.3951 late on Thursday. The euro had fallen as low as US$1.3881 on Thursday, its lowest point in nearly a year.
The British pound climbed to US$1.7937 from US$1.7528 late on Thursday,
But the dollar rose to ¥107.76 from ¥106.73 late on Thursday.
On Friday, the US Commerce Department said retail sales fell by 0.3 percent last month, following the 0.5 percent decline in July.
Economists had expected a 0.3 percent rise for last month.
Meanwhile, the US Labor Department said that wholesale inflation sank by 0.9 percent last month, nearly double what had been expected, as the price of oil and gasoline slid. In May, June and July, the prices producers pay had surged higher, reflecting the rise in energy costs.
Restrained inflation may lessen the need for the Federal Reserve to hike rates, and heightens the possibility of lowering interest rates again.
The Fed had cut rates seven times from September last year to June before signaling a pause as inflation rose.
Higher interest rates can curb inflation and boost a currency, making assets denominated in that currency more attractive to investors. Cutting rates can propel inflation and economic growth, but undercut a currency as investors transfer funds to higher-yielding assets.
Many financial stocks saw sharp drops as Lehman Brothers Holdings Inc tried to find a buyer and find relief from losses caused by real estate-related debt.
In other New York trading, the US dollar slipped to 1.1319 Swiss francs from SF1.1393, and dropped to C$1.0606 from C$1.0779.
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