Investing.com – The U.S. dollar retreated Friday as the U.S. said it would move ahead with hefty tariffs on Chinese goods, raising fears of a trade war between the world’s two largest economies.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell by 0.13% to 94.80.

Trump, confirmed Friday that a 25 percent tariff would be imposed on a list of imports from China, and vowed further levies could be imposed if Beijing retaliated, raising the prospect of a trade war.

Mostly bullish U.S. economic did little to spark a recovery in the greenback as Empire State manufacturing and Michigan consumer sentiment topped expectations but industrial production unexpectedly fell.

The dollar was also held back by a rebound in the euro, which suffered its worst day in two years on Thursday following a somewhat dovish tilt from the European Central Bank.

The European Central Bank said Wednesday that interest rates would be left unchanged until the summer of 2019.

EUR/USD rose 0.33% to $1.1606, while GBP/USD added 0.15% to $1.3281

USD/CAD rose 0.69% to C$1.3192 as a plunge in oil prices weighed on the loonie amid expectations OPEC and its allies will ramp up output.

USD/JPY fell 0.05% to Y110.58 as trade war fears stoked demand for safe-haven yen.

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