FOREX-Dollar stays near 3-week high after retail sales boost

       * Strong retail sales data lifts mood on U.S. economy
    * Swiss franc, precious metals under pressure
    * Chinese yuan off highs amid concerns over Evergrande

    By Hideyuki Sano
    TOKYO, Sept 17 (Reuters) - The dollar held near three-week
highs against a basket of major currencies on Friday after a
raft of strong U.S. economic data rekindled expectations of an
earlier policy tightening by the U.S. Federal Reserve.
    U.S. retail sales unexpectedly increased in August, rising
0.7% from the previous month despite expectations of a 0.8%
fall, while a business sentiment survey by the Philadelphia Fed
also showed a big improvement.
    "Yesterday's data were pretty strong across the board,"
said Yujiro Goto, chief currency strategist at Nomura
Securities. "The markets had been worried that consumption would
be weak in August because of the Delta variant. But retail sales
were surprisingly strong."
    The figures helped to curb cautious views on the U.S.
economy after a tame consumer inflation reading and soft job
growth data earlier this month, and revived expectations for an
early Fed tapering.
    The more bullish mood faces another test later on Friday
with the release of University of Michigan's consumer sentiment
index, which surprised many investors last month by tumbling to
a decade-low due to smaller income gains and higher inflation.

    The dollar index stood at 92.865, near Thursday's
three-week high of 92.965.
    The euro hit a three-week low of $1.17505 overnight and last
traded at $1.1769.
    The common currency also hit a three-week low of 128.61 yen
 and one-month low of 0.8501 British pound,
before recovering some losses.
    The dollar's strength was most pronounced against other
safe-haven assets, such as the Swiss franc and precious metals.
    The Swiss franc hit a five-month low of 0.92805 to the
dollar, after falling 0.89% on Thursday.
    Gold edged up a tad to $1,759.3 per ounce after a
2.3% fall in the previous session, while silver changed
hands at $22.92 per ounce. Silver lost 3.7% on Thursday, take it
towards eight-month lows touched in August.
    The dollar bounced back to 109.84 yen, having gained
0.34% on Thursday to rise off Wednesday's six-week low of
109.11.
    The yen has so far shown only a limited reaction to the
ruling Liberal Democratic Party's (LDP) leadership race, which
will formally kick off on Friday ahead of a Sept. 29 vote. The
LDP's parliamentary dominance means the party's new leader will
become prime minister.
    Many investors see vaccine minister Taro Kono as a
front-runner, followed by former foreign minister Fumio Kishida
and former internal affairs minister Sanae Takaichi.
    "The world's major macro players are not expecting big
policy shifts. A lack of moves in the yen is a testament to
that," said Hiromichi Shirakawa, vice chairman and chief
economist for Credit Suisse in Japan.
    Still, former internal affairs minister Seiko Noda's
decision to join the race on Thursday increased uncertainties as
it means no single candidate may win on the first round, taking
the election to a run-off that could work against Kono.

    Elsewhere, sterling eased to $1.3795 while the
Australian dollar traded at $0.7294 after touching a
three-week low of $0.7274 in the previous session.
    The Chinese yuan licked its wounds after Thursday's 0.4%
fall.
    The offshore yuan last traded at 6.4545 to the dollar
, pressured by growing worries about China's real estate
sector as investors fear property giant China Evergrande (EGRNF)
 could default on its coupon payment next week.

    Still, on a trade-weighted basis, the yuan stood near its
highest level in five years, both in the onshore
and offshore market.
    "It is hard to tell how big the impact will be. So far only
Chinese shares appeared to be affected but whether this will
lead to a risk-off trade, we will have to see," said Hiroshi
Morimatsu, director of forex at MUFG Bank.
    Cryptocurrencies stepped back from this week's high with
bitcoin traded at $47,774 and ether at $3,558
.

    ========================================================
    Currency bid prices at 0341 GMT
 Description      RIC         Last           U.S. Close  Pct Change     YTD Pct     High Bid    Low Bid
                                              Previous                   Change
                                              Session
 Euro/Dollar                  $1.1769        $1.1768     +0.01%         -3.67%      +1.1770     +1.1759
 Dollar/Yen                   109.8350       109.7200    +0.12%         +6.35%      +109.9150   +109.7650
 Euro/Yen         Dollar/Swiss                 0.9268         0.9279      +0.02%         +4.89%      +0.9281     +0.9272
 Sterling/Dollar              1.3796         1.3792      -0.04%         +0.91%      +1.3799     +1.3784
 Dollar/Canadian              1.2678         1.2685      -0.03%         -0.42%      +1.2690     +1.2675
 Aussie/Dollar                0.7295         0.7295      -0.01%         -5.18%      +0.7297     +0.7282
 NZ                           0.7068         0.7076      -0.09%         -1.56%      +0.7075     +0.7060
 Dollar/Dollar


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 (Reporting by Hideyuki Sano; Editing by Sam Holmes and Richard
Pullin)

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