US data showing retail sales fell 8.7% in March, the biggest decline since tracking began in 1992, underlined fears that damage to the economy from the virus outbreak will be deep and protracted
A flight to safety bid pushed the dollar higher against its peers on Thursday after dire retail and factory data showed the severity of the collapse in US economic activity caused by the novel coronavirus outbreak.
The dollar rose 0.2% to 99.831 against a basket of six other major currencies, turning positive on the week.
The euro dropped 0.25% to $1.0881, off its two-week high of $1.0980 hit in the previous session, while the dollar advanced 0.4% to 107.86 yen.
The British pound fell 0.2% to $1.2482 after having lost nearly 1% in the previous session.
"The dollar is maintaining its momentum following US data yesterday," said Kazushige Kaida, head of foreign exchange at Tokyo Branch of State Street.
"But the main player in the market now is short-term leveraged accounts, or hot money. It is not like a lot of investors are taking part in this," he added.
US data showing retail sales fell 8.7% in March, the biggest decline since tracking began in 1992, underlined fears that damage to the economy from the virus outbreak will be deep and protracted. Consumer spending accounts for more than two-thirds of US economic activity.
Separately, a report from the Federal Reserve showed manufacturing output plummeted 6.3% last month, the biggest decrease since February 1946.
The New York Federal Reserve also reported that its Empire State manufacturing index, which tracks activity in the sector for New York State, fell to an all-time low.
The grim numbers poured cold water on recent improvements in market sentiment and hopes the outbreak may be nearing its peak with many developed countries looking to re-open their economies as soon as next month.
"Given the scale and breadth of the US shutdown, our best guess is the economy contracts by around 13% peak-to-trough before we start to see a rolling process of re-opening in the United States from mid-May," said James Knightley, Chief international economist at ING.
"This will involve some ongoing form of social distancing meaning that a return to 'business as usual' could take many months – we don't expect the lost output to be fully recovered until mid-2022."
The death toll from the coronavirus in the United States approached 31,000 on Wednesday as governors began cautiously preparing Americans for a post-virus life that would likely include public face coverings as the "new normal".
Governors of about 20 US states where the pandemic has had a low impact believe they may be ready to start the process of reopening their economies by President Donald Trump's May 1 target date, but a labour union chief has warned against re-opening before making sure it is safe.
The Australian dollar fell 0.4% to $0.6293, reversing earlier gains as traders shrugged off better-than-expected jobs data for not capturing the impact of lockdowns.
The New Zealand dollar lost 0.6% to $0.5961 after the Reserve Bank of New Zealand Governor Adrian Orr said negative interest rates were not off the table in its response to the economic fallout of the coronavirus crisis.
A plunge in crude prices weighed heavily on oil producing countries' currencies.
The Canadian dollar nursed losses at C$1.4116 per US unit. The Bank of Canada has added to the suite of assets it is purchasing to cushion the blow from the pandemic. The Mexican peso fell 1.7% to 24.4030 to the dollar.
US crude prices fell to an 18-year low and Brent lost more than 6% on Wednesday after the United States reported its biggest weekly inventory build on record.
But prices bounced back early on Thursday on hopes the build may mean producers have little option but to deepen output cuts as the coronavirus pandemic ravages demand.