NEW YORK (Reuters) - The dollar rose on Friday after data showed U.S. consumer spending appeared to have regained its mojo in January, supporting the possibility the Federal Reserve will continue to raise interest rates as other central banks ease policy.
The solid U.S. retail sales boosted the dollar against the Japanese yen JPY=, which had been the primary beneficiary of global growth fears that have persisted through much of the year.
The dollar had fallen to a 15-month low against the yen and was on track for its biggest weekly decline against the Japanese currency since 2008 after falling four straight days this week.
On Friday, the dollar rose 0.75 percent to 113.26 yen. Despite the turnaround, the dollar has fallen more than 3 percent against the yen for the week. It was the second straight week the dollar had dropped more than 3 percent against the Japanese currency.
That was the most the dollar has fallen against the yen in back-to-back weeks since October 1998, when the two-week drop was more than 14 percent.
"We are expecting the dollar to weaken somewhat in the near term before eventually continuing to strengthen more broadly over the medium to long term," said Eric Viloria, currency strategist at Wells Fargo in New York.
Viloria said he expects policy divergence between the Federal Reserve and other central banks that have adopted negative interest rates or are actively easing policy to make the dollar a good long-term bet.
Friday's strong U.S. data backed statements from Fed Chair Janet Yellen and New York Fed President William Dudley this week that suggested the Fed has not changed its thinking on the rate hike program it began in December.
"The theme of policy divergence between the Fed and the rest of the world's central banks is still an intact theme," said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Limited in New York.
The euro EUR= fell 0.6 percent against the dollar to $1.1250.
The dollar rose 0.5 percent against the Swiss franc CHF= to 0.9765 franc.
The dollar index .DXY, which tracks the dollar against six major world rivals, rose to a session high of 96.215 in afternoon U.S. trading. It was last up 0.4 percent to 95.972.
Reporting by Dion Rabouin; Editing by Chizu Nomiyama and Andrew Hay