Investing.com - The dollar extended losses against a basket of other major currencies on Wednesday, as the release of downbeat U.S. economic reports weighed heavily on demand for the greenback.
Official data showed that U.S. retail sales fell 0.3% last month, more than the expected 0.1% slip, after an increase of 0.6% in August.
Core retail sales, which exclude automobiles, dropped 0.2% in September, confounding expectations for a 0.3% gain, after a 0.3% rise the previous month.
A separate report showed that U.S. producer price inflation slipped 0.1% last month, disappointing expectations for a 0.1% rise, after a flat reading in August.
In addition, the Federal Reserve of New York reported that its manufacturing index tumbled to a six-month low of 6.2 in October from a reading of 27.5 the previous month. Analysts had expected the index to tick down to 25.5 this month.
The US Dollar Index, which tracks the performance of the greenback against a basket of six major currencies, dropped 0.73% to 85.28.
EUR/USD rose to three-week highs before retracing some of those gains to hit 1.2769, up 0.88% for the day.
The euro had come under pressure earlier, amid growing concerns over the outlook for growth in the euro zone after data on Tuesday showed that the bloc's industrial production declined more than expected in August, while July's figure was revised down.
A separate report showed that German economic sentiment deteriorated to the lowest level since December 2012 in October, fuelling further concerns over the euro zone's largest economy.
The pound eased off 11-month lows, with GBP/USD gaining 0.42% to trade at 1.5970. Data released earlier in the session showed that the U.K. claimant count declined less than expected in August, although the unemployment rate fell to the lowest level since October 2008.
The U.K. Office for National Statistics said that the claimant count fell by 18,600 last month, compared to expectations for a decline of 35,000 people. August’s figure was revised to a drop of 33,200 people from a previously reported decline of 37,200.
The report also showed that the rate of unemployment declined to 6.0% in the three months to August, compared to expectations for a reading of 6.1% and down from 6.2% in the three months to July.
The dollar dropped to more than one-month lows, with USD/JPY last down 0.87% at 106.11, while USD/CHF lost 0.90% at 0.9452, recovering from a two-and-a-half week trough hit earlier in the session.
The commodity-related dollars strengthened broadly, with AUD/USD gaining 0.99% to 0.8799 and NZD/USD jumping 1.08% to 0.7927, while USD/CAD pulled away from a five-year peak and was last up only 0.08% at 1.1306.
Earlier Wednesday, the Westpac Banking Corporation said its index of consumer sentiment for Australia rose 0.9% this month after a 4.6% decline in September, while a separate report showed that new motor vehicles in Australia increased by 2.9% last month after a 1.6% decline in August.