New government data showing more evidence of a weakening U.S. economy undermined the dollar against the euro Friday.

Euros were selling for $1.3892, up from $1.3886 late Thursday.

Traders had to contend with several items providing feedback on the economy, but one in particular stood out for suggesting a slowdown by consumers.

The Commerce Department's retail sales report for August was worse than expected, showing a 0.3% increase on the headline number and a 0.4% decline when auto sales were excluded. Both were weaker than the consensus forecasts.

"It's certainly another negative for the dollar," says David Powell, a currency strategist at IDEAglobal in New York. "It shows the American consumer tightened his or her wallet."

However, Powell adds there could be worse to come because the statistics don't capture the deteriorating jobs market in September or the declining availability of consumer credit.

In other currencies, the dollar was rallying against the British pound on news of a banking crisis in the United Kingdom.

One pound was buying $2.0286, down from $2.03 a day earlier.

The Bank of England, roughly equivalent to the Federal Reserve, said it was helping prop up ailing mortgage lender Northern Rock. Even so, panicked customers were rushing to withdraw savings from the bank. Shares of Northern Rock sank in European trading.

Investors are worried problems in the banking system will spill over to the rest of Britain's economy, explains Ellen Zentner, an economist at Bank of Tokyo-Mitsubishi UFJ in New York.

There is also concern from investors that toxic mortgage debt created in the U.S., but now owned by European money managers, may still implode, causing another banking problem in Europe, she adds. Such events would spark further currency market gyrations.

As for other currencies, the dollar was selling for 115.13 yen, vs. 115.25 yen previously.

The PowerShares DB G10 Currency Harvest ( DBV), which invests in a variety of currencies, was edging ahead by 0.1%.

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