Investing.com - The dollar reached fresh four-and-a-half year highs against a basket of other major currencies on Friday, boosted by the release of better-than-expected U.S. retail sales data and as markets eyed an upcoming consumer sentiment data due later in the day.
Official data showed that U.S. retail sales rose 0.3% last month, exceeding expectations for a 0.2% gain, after a 0.3% fall in September.
Core retail sales, which exclude automobiles, increased by 0.3% in October, compared to expectations for a 0.2% slip the previous month.
The US dollar index, which tracks the performance of the greenback against a basket of six major currencies, was up 0.54% to 88.31, the highest level since June 2010.
EUR/USD declined 0.56%, nearing 24-month lows at 1.2406 after data showed that inflation in the euro zone was flat in October, in line with market expectations, after a 0.4% rise in September.
The bloc's annual rate of inflation remained unchanged at 0.4% last month.
Core CPI in the euro zone, which excludes food, energy, alcohol and tobacco, ticked down to an annual rate of 0.7% last month from 0.8% in September.
The data fuelled further concerns over persistently low levels of inflation in the euro area. The European Central Bank targets an inflation rate of close to, but just below 2%.
Meanwhile, a separate report showed that the euro zone's gross domestic product rose 0.2% in the third quarter, more than the expected 0.1% uptick. The bloc's economy expanded at an annual rate of 0.8% in the last quarter, compared to expectations for 0.7% growth.
Earlier Friday, a preliminary report showed that Germany's GDP rose 0.1% in the last quarter, in line with expectations, after a revised 0.1% contraction in the three months to June.
France's economy grew 0.3% in the third quarter, exceeding expectations for growth of 0.1%, after a contraction of 0.1% in the previous quarter.
The dollar hit fresh seven-year highs of 116.82 against the yen, with USD/JPY last up 0.83%.
The yen came under broad selling pressure this week amid mounting speculation that Prime Minister Shinzo Abe could call a snap election in December.
A win for Abe would indicate continued support for his for his economic and fiscal policies, which call for a weaker yen.
Meanwhile, GBP/USD dropped 0.54% to 1.5625, while USD/CHF gained 0.47% to 0.9681.
The pound came under pressure after the Office for National Statistics said that U.K. construction output rose 1.8% in September, below expectations for an increase of 3.7%. Construction activity for August was revised to a 3.0% decline from a previously estimated 3.9% drop.
The Australian dollar and New Zealand dollars were lower, with AUD/USD declining 0.65% to 0.8660 and with NZD/USD down 0.55% at 0.7837. USD/CAD was steady at 1.1377.