Better-than-expected retail sales data in the United States on Thursday also encouraged buying of the dollar. The crown extended its selloff after the Norges bank said on Thursday its plan for an interest rate rise this year was now more uncertain. Norway's currency has been falling fast since June as the price of oil - its principal export - has tumbled and as fears of weaker global growth and tougher trade relations weighed down on the open Norwegian economy. Trade tensions between the United States and China intensified last week after President Donald Trump warned he will be raising tariffs on additional Chinese imports this year.
The crown later rebounded and was last up 0.3% at 8.991. Against the euro the crown rose 0.6% to 9.9655. Earlier this month the crown dropped to a near 11-year low versus the euro. "There's no good reason to be super bullish on the Norwegian crown," said Lauri Halikka, a fixed income and foreign exchange strategist at Nordic bank SEB.
The euro fell on Friday due to growing expectations of an interest rate cut by the European Central Bank after Governing Council member Olli Rehn suggested on Thursday that the central bank could restart its quantitaive easing programme and was open to extending it into equity purchases. "For the markets this came as a surprise," said Ulrich Leuchtmann, an analyst at Commerzbank. However, the euro is unlikely to sink much further on this reason, Leuchtmann said.
"ECB-induced euro weakness will be relatively limited (because) if Europe's common currency would weaken too much, the US government's pressure on the Fed (to weaken the dollar) could intensify." Measured against a basket of six major currencies, the dollar was higher by 0.1% at 98.266. It has recovered by 1.3% from its three-week low on Aug. 9.
Data showing US consumers kept spending in July came as a relief after the US Treasury yield curve inverted this week, which historically has preceded US recessions. The inversion stoked worries about the impact of the Sino-US trade war. The curve steepened a little on Friday.
China's offshore yuan, whose plunge past 7 to the dollar last week sent shivers through financial markets, was weaker on Friday at 7.0530. The People's Bank of China fixed the onshore yuan currency at 7.0312 on Friday, compared with market expectations at 7.0307, according to analysts at Commerzbank. Sterling was up 0.7% at $1.2160, after reaching an eight-day high of $1.2169 earlier. Against the euro, the pound reached two-week high of 91.94 pence.