Investing.com - The U.S. dollar trimmed losses against other major counterparts on Friday, helped by strong U.S. consumer sentiment data, although a disappointing report on U.S. inflation released earlier in the day continued to weigh.
The dollar regained some strength after the University of Michigan said in a preliminary report that its consumer sentiment index climbed to its highest level since 2004 this month.
The data came after the U.S. Commerce Department said retail sales recorded their biggest increase in two-and-a-half years in September.
However, a separate report showed that U.S. consumer prices rose less than expected in September, both on a monthly and annual basis.
Some fear that a lower than expected increase in U.S. inflation could prevent the Federal Reserve from raising interest rates in December.
Fed Governor Lael Brainard said on Thursday that the central bank's timeline for interest rate hikes could be implemented better if the Fed were to wait until inflation rises above its target.
Separately, St. Louis Fed President James Bullard said the U.S. central bank needs to mount a clear defense of its 2% inflation target and stop raising rates until the pace of price increases strengthens.
EUR/USD was up 0.16% at 1.1850, not far from Thursday's two-week peak of 1.1880, while GBP/USD advanced 0.36% to trade at a fresh two-week high of 1.3309.
The pound remained supported by a report published on Thursday by German newspaper Handelsblatt indicating that the U.K. could stay in the European Union for another two years.
According to the report, the EU's offer is tied to the U.K. meeting all of its obligations as a member country, but giving up its voting rights.
Meanwhile, the euro was also supported after European Central Bank President Mario Draghi said in a speech on Thursday that interest rates would remain at current levels "well past" the time the central bank stops buying assets.
Elsewhere, USD/JPY slumped 0.35% to 111.90, while USD/CHF shed 0.21% to 0.9734.
The Australian was little changed, with AUD/USD at 0.7889, while NZD/USD climbed 0.88% to trade at 0.7189.
Official data earlier showed that China's imports increased 18.7% last month, while exports rose 8.1%.
China is Australia's biggest export partner and New Zealand's second biggest export partner.
The Canadian dollar held steady, with USD/CAD at 1.2482.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.18% at 92.77 by 10:45 a.m. ET (14:45 GMT), just off a more than two-week low of 92.59 hit earlier in the session.