The dollar index traded around 103 on Friday after gaining half a percent in the previous session, underpinned by better-than-expected US economic data which suggested that recession fears were overblown.

Retail sales in the US rose by 1% from the previous month in July, well above market forecasts of 0.3% amid robust consumption. Additionally, new unemployment claims unexpectedly fell for a second week, alleviating labor market concerns. Meanwhile, the dollar remained under pressure from softer-than-anticipated US inflation data for July.

Markets are convinced that the Federal Reserve will start cutting interest rates in September, but remain divided on whether it would be a 25- or 50-basis point cut. The dollar strengthened the most against the euro, kiwi and yen, while an improving economic outlook supported risk-sensitive currencies like the sterling and aussie.

Source: Trading Economics