Dollar Down Fir The Week on Blurred Pictures for U.S. Rate

By James Ramage 

        The dollar edged lower broadly this week as uncertainty over China and depressed global inflation pressures clouded investors' view on U.S. interest rates and limited their appetite for the currency.
        The greenback labored to gain traction against the euro and the yen this week despite moderately positive U.S. data, including solid numbers for retail sales and industrial production. China's sharp devaluation of its currency and falling commodity prices, including a new six-year low in oil, shook financial markets over the week, discouraging investments in riskier trades and unwinding bets on the dollar's rise against other developed-market currencies.
        The Wall Street Journal Dollar Index, which measures the greenback against a basket of 16 widely traded currencies, was up 0.1% during Friday's session, but has fallen 0.3% on the week so far.
        The dollar rose 0.3% against Europe's common currency on Friday, with one euro buying $1.1114. But the greenback has slid 1.3% so far for the week. Against the yen, the greenback edged 0.1% lower on Friday to Yen124.26, and is flat for the week.
        The dollar continues to struggle whenever investors fear the Federal Reserve will delay raising short-term interest rates from near zero. To aggravate matters, solid data hasn't given the dollar much momentum recently as events in China----a 3.2% fall in the yuan, doubts about the country's economic growth and its impact on global inflation----have overshadowed upbeat U.S. economic data.
        "Continued doubts about the timing of a Fed rate hike will keep the dollar's gains limited in the near-term," Omer Esiner, chief market analyst at currency brokerage Commonwealth Foreign Exchange, Inc., wrote in a research report.
        Many money managers rushed into the dollar in 2014 and earlier this year with the conviction that better U.S. economic data would compel the Fed to lift borrowing costs soon. Higher U.S. rates would boost the dollar's allure to investors seeking yield.
        On Friday, numbers measuring U.S. business prices and output for the manufacturing, utilities and mining sectors came in above expectations. The figures eased some concerns about a lack of broader inflation in the U.S. and signaled a pickup in the manufacturing sector.
        But the University of Michigan preliminary August sentiment index fell slightly, suggesting that American consumers' confidence in the economy hasn't risen from July.
        "The U.S. data are too mixed to give us an unambiguous signal for a Fed move in September," said Daniel Katzive, head of currency strategy for North America at BNP Paribas.
        Write to James Ramage at james.ramage@wsj.com
        (END) Dow Jones Newswires

        August 14, 2015 12:17 ET (16:17 GMT)