Investing.com - The dollar pulled away from recent 12 year highs against the other major currencies on Wednesday, after data showed that U.S. retail sales fell more-than-expected last month, although the ongoing drop in oil prices continued to support safe-haven demand.
In a report, the U.S. Commerce Department said that retail sales declined by 0.9% last month, worse than expectations for a drop of 0.1%. Retail sales growth for November was revised down to a 0.4% gain from a previously reported increase of 0.7%.
Core retail sales, which exclude automobile sales, slumped by 1.0% in December, disappointing forecasts for a 0.1% increase. Core sales in November rose by 0.1%, downwardly revised from a previously reported increase of 0.5%.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was down 0.45% at 92.03, still close to the 12-year peaks of 92.76 scaled last week.
Crude oil was hit after the World Bank cut its forecasts for global growth on Tuesday, adding to fears over the faltering economic recovery. Oil prices continued to tumble on Wednesday after falling to almost six year lows in the previous session, after OPEC said it will not cut output despite a global supply glut.
The rout in oil, which has halved in value in six months, has fuelled concerns of exacerbating already low levels of inflation in many major world economies.
EUR/USD rose off nine-year lows of 1.1727, hit earlier in the session, and reached 1.1821, up 0.40% for the day.
The single currency weakened earlier, after the advocate general of the European Court of Justice, Pedro Cruz Villalon, advised judges to approve the ECB's Outright Monetary Transactions program, a measure which was launched in 2012.
Villalon said the ECB must avoid any "direct involvement in the financial assistance program that applies to the State concerned."
The ruling was seen as giving the ECB leeway at its upcoming policy meeting on January 22, when many expecte it to implement full blown QE measures.
Also Wednesday, data showed that euro zone industrial production rose 0.2% in November, in line with expectations, but factory output was down 0.4% on a year-over-year basis.
The dollar pushed lower against the yen, with USD/JPY down 1.39% to one-month lows of 116.27.
Elsewhere, the pound extended earlier gains, with GBP/USD up 0.51% to 1.5237, while USD/CHF slid 0.33% to trade at 1.0167.
AUD/USD was down 0.10% to 0.8157 and NZD/USD rose 0.28% to 0.7758, while USD/CAD pulled away from five-and-a-half year highs of 1.2017 and held steady at 1.1961.