By Hideyuki Sano

TOKYO (Reuters) – The dollar held near three-week highs against a basket of major currencies on Friday after a raft of strong U.S. economic data rekindled expectations for earlier policy tightening by the U.S. Federal Reserve.

U.S. retail sales increased 0.7% in August despite the expectation of 0.8% drop. The Philadelphia Fed’s business sentiment survey also revealed a significant improvement.

Yujiro, Nomura Securities’ chief currency strategist, said that yesterday’s data was “very strong all across the board.” The Delta variant had caused concern among markets that August’s consumption might be low. However, retail sales were surprisingly strong.

These figures were able to temper cautious views about the U.S. economic after the soft job growth data and tame consumer inflation readings published earlier in this month. They also helped revive hopes for an early Fed tapering.

The stood at 92.880, near Thursday’s three-week high of 92.965.

Three-weeks ago, the euro dropped to $1.17655, and it was last trading at $1.1765.

Before recovering some of its losses, the common currency fell to a 3 week low of 128.61 Japanese yen and a 1-month low at 0.8501 British Pound.

Contrary to other safe-haven assets such as precious metals and the Swiss franc, the dollar was stronger than any of these.

Five-month low for the Swiss Franc of 0.92785 against the dollar. Thursday’s fall was 0.89%.

The price of gold was $1,754.4/ounce following 2.3% drops in the previous session. Meanwhile, silver traded hands at $22.88/ounce on Thursday after losing 3.7%, close to August’s eight-month lows.

After gaining 0.34% Thursday, the dollar climbed to 109.72 Japanese yen. This is a rebound from Wednesday’s low of 109.11.

While the yen’s reaction has been limited to the LDP leadership race (ruling Liberal Democratic Party), which officially kicks off Friday, ahead of September 29th vote, it is not yet reacting. Due to the LDP’s dominance in Parliament, their new leader will take office as prime minister.

Investors view Taro Kono (vaccine minister), as the main contender. Fumio Koshida, former foreign minister and Sanae Takaichi are both former interior affairs ministers.

The world’s top macro-players aren’t expecting major policy changes. A lack of moves in the yen is a testament to that,” said Hiromichi Shirakawa, vice chairman and chief economist for Credit Suisse (SIX:) in Japan.

However, Seiko Noda (ex-internal affairs minister) joined the race Thursday. That could result in no one candidate being elected to the first round. The election then moves to the second round. Kono may be at risk.

The Australian dollar trades at $0.7294, after falling to a low of $0.7274 three weeks ago. Sterling dropped to $1.3795.

The licked wounds after Thursday’s 0.4% fall.

The yuan traded last at 6.4353 to the dollar in offshore trade. This was due to growing concerns about China’s real-estate sector and investors worried that China Evergrande, a property giant, could fail on its coupon payments next week.

The cryptocurrencies fell from their high this week, with bitcoin trading at $47.663 and Ethereum at $3.552.