LONDON, Nov 12 (AFP) - The dollar fell back against the euro and yen Friday as strong US retail sales and consumer confidence data were not enough to ward off concerns about the United States' huge current account deficit.
The single European currency rose to 1.2975 dollars in late European trading from 1.2904 late on Thursday in New York.
The dollar declined to 105.58 yen against 106.59 on Thursday.
Better-than-expected US retail sales and consumer confidence figures gave the dollar a short-lived boost.
However, the gains were erased after the release of weak business inventories data and as the market continued to focus on concerns over the US current account deficit.
"The market is not really paying any attention to any good news coming out of the US at the moment," said Standard Chartered forex analyst Marios Maratheftis.
US retail sales showed surprising strength in October, rising 0.2 percent despite a large decline in auto sales. Excluding autos, sales rose 0.9 percent above expectations for a rise of around 0.6 percent.
The widely watched University of Michigan consumer sentiment index for November was also strong, rising to 95.5 points from 91.7 in October, and again above expectations for a rise to 93.8. US business inventories showed a rise of just 0.1 percent in September, however, well below forecasts for a 0.5 percent increase.
CALYON currency analyst Daragh Maher said the retail sales report was a "reasonably upbeat report", but said with the market so bearish on dollars it was unlikely to have much impact.
"For a foreign exchange market determined to sell dollars, it is unlikely that this release is sufficiently far ahead of consensus to prompt any lasting re-think on dollar fortunes," he said.
With the US economy showing signs of picking up, however, while the eurozone economy appears sluggish, the euro could start to be looking expensive at these levels.
"If the relative cyclical performance and interest rate outlook re-emerges as the driver to currencies, the euro at this level will be looking decidedly vulnerable," Maher said.
Standard Chartered's Maratheftis agreed, saying the euro is set for some short-term consolidation, settling around the 1.29-dollar level.
Elsewhere, the yen outperformed as the market remains confident in the Japanese economy despite weak growth data publishd Friday.
The figures showed the Japanese economy grew just 0.1 percent in the July-September quarter, against expectations for growth of around 0.5 percent.
The yen's gains signal "adequate confidence in Japan s domestic recovery", BNP Paribas analysts said.
Maratheftis believed the yen still had more room to appreciate against the dollar and is likely to move towards 105, despite concerns over possible Bank of Japan intervention.
The euro was changing hands at 1.2975 dollars from 1.2904 late on Thursday in New York, 136.87 yen (137.57), 0.6993 pounds (0.7007) and 1.5213 Swiss francs (1.5192).
The dollar stood at 105.58 yen (106.59) and 1.1730 Swiss francs (1.1774).
The pound was at 1.8550 dollars (1.8411), 195.84 yen (196.25) and 2.1762 Swiss francs (2.1682).
On the London Bullion Market, the price of an ounce of gold stood at 436.05 dollars against 433.40 late on Thursday.
11/12/2004 17:19 GMT - AFP