* Euro slightly weaker on report French left may unite
* Dollar index on course for small weekly loss
* Weakened by halt in rise in Treasury yields since
* Sterling hammered after poor retail sales
* Graphic: World FX rates in 2016 tmsnrt.rs/2egbfVh
By Patrick Graham
LONDON, Feb 17 Falls for the euro and the pound
dominated trade in the major global currencies on Friday, hit by
a combination of nerves over upcoming French elections and signs
British consumers are beginning to struggle in the face of the
A week of trading dominated by fairly tight ranges and
discussion of the outlook for U.S. inflation and interest rates
looked set to end with the sixth loss in eight weeks for the
dollar, quelling hopes of a new rally in the greenback.
But it was a report that suggested the French left could
unite behind one candidate in presidential elections, possibly
knocking centrist and right-leaning nominees out of the race in
the first round, that grabbed the attention in the European
The yen -- investors' favoured safe haven for capital in
times of global and political uncertainty -- rose 0.4 percent
against the dollar and 0.6 percent against the euro
on the day.
The euro dipped around a quarter of a percent to $1.0648.
"It seems like a broader, but fairly small, risk-off move,"
said Josh O'Byrne.
"We saw the odds for a Le Pen victory move a bit higher this
morning. That seemed to drive a bit of weakness in (bond prices
in the euro zone) periphery as well."
Sterling meanwhile hit a 10-day low against the euro after a
surprise third monthly fall running in British retail sales
pointed to weakening consumer sentiment as the government gets
ready to launch talks on leaving the European Union.
Shoppers have driven a relatively robust performance for
Britain's economy since last June's Brexit vote but sales
volumes fell 0.3 percent month-on-month in January - much weaker
than forecasts for a 0.9 percent increase.
Those were just the latest signs of fatigue among households
facing the impact of a 20 percent fall in the value of sterling
and rising fuel prices.
"Retail was the beating heart of the UK economy in 2016, so
with consumer spending expected to slide in the coming months we
could see the pound push lower against both the euro and the
dollar," said Paul Sirani, Chief Market Analyst at broker
U.S. government bond yields, rising steadily over the past
10 days, hit a wall on Wednesday and barring a broader revival
in U.S. time, the dollar index was on course for another small
Many banks still expect the greenback to make more progress
in the months ahead, but the signals on policy emerging from
Washington have not engendered further confidence in U.S.
President Donald Trump's promise to reflate the U.S. economy.
A combative presidential news conference on Thursday
followed the resignation of National Security Adviser Michael
Flynn this week and had analysts again wondering how effective
the administration will be in pushing through its legislative
"Despite the relatively strong data we have seen, the dollar
is not doing better and I think that is that moderation of
expectations on Trump," Citi's O'Byrne said.
"Yesterday’s news conference perhaps was also an additional
factor moderating that Trump theme."
For Reuters Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Shinichi Saoshiro in TOKYO; editing by