LONDON (MarketWatch) -- The dollar was flat to slightly higher versus major counterparts Tuesday, consolidating ahead of the release of U.S. retail sales figures for August and a speech from Federal Reserve Chairman Ben Bernanke on the one-year anniversary of the collapse of Lehman Brothers.
The euro traded at $1.4598, down slightly from $1.4614 versus the dollar in New York trade Monday afternoon.
The single currency came under pressure after a gauge of German investor confidence posted a weaker-than-expected rise in September, but then trimmed losses.
The Mannheim-based Center for European Economic Research, or ZEW, said its economic expectations index rose to 57.7 in September, up from 56.1 in August. Economists had forecast a rise to 59.5. See full story.
The dollar index (DXY 76.83, +0.14, +0.18%) , a measure of the U.S. unit against a basket of rival currencies, traded at 76.80, up slightly from 76.727.
The British pound was the big mover on currency markets, dropping versus the greenback and falling to a three-month low versus the European single currency after Bank of England Governor Mervyn King said the Monetary Policy Committee was considering a cut in the deposit rate paid on some reserves held by commercial banks at the BOE.
Such a move would penalize banks for holding reserves above a certain level at the central bank, spurring them to buy bonds and other assets. That would effectively expand the central bank's quantitative-easing program, analysts said. See full story.
The pound fell 0.6% versus the U.S. dollar to $1.6473. The euro moved to its highest level against sterling since June, and changed hands in recent action at 88.68 pence.
The dollar rose to 91.15 yen versus the Japanese currency, up from 91.02 yen late Monday.
U.S. data on tap for Friday include producer prices for August at 8:30 a.m. Eastern time, as well as August retail sales, the Empire State index for September and, at 10 a.m. Eastern time, inventories for July.
Bernanke speaks at 10 a.m. Eastern time.
Economists polled by MarketWatch expect a 2.3% increase in retail sales, a 1.5% increase in producer prices and a 1% drop in inventories.
The retail sales figure could prove to be the most important, particularly if the figures disappoint, said Boris Schlossberg, director of currency research at GFT.
"The consumer remains the weakest link in the recovery story not only in [the] U.S. but across the G20 universe, and if the retail sales data disappoint today it may finally trigger a correction in risk assets that many traders have been anticipating for weeks," he said, in a research note.
