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Oil slide knocks Norwegian crown; data bolsters dollar

The U.S. dollar cut its losses against the euro, extended gains against the yen and reached an 11-year high against the Norwegian crown on plunging oil prices and stronger-than-expected U.S. economic data on Friday.

Oil prices fell to 5-1/2 year lows on concerns of a global glut, dampening inflation expectations. However, lower energy costs also increase the cash consumers have to spend heading into year-end holidays.

U.S. consumer sentiment rose to an eight-year high in December, above economists' forecasts, according to the Thomson Reuters/University of Michigan survey. The gain was fueled by improved prospects for jobs and wages, while inflation expectations rose as well, bolstering the case for the U.S.

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Federal Reserve to raise interest rates next year.

Englander said interest rate forecasts were low and what the Fed really cares about is not shaky equity markets but job creation, while inflation expectations are not as wobbly as previously thought.

The Fed's two-day meeting next week ends with its interest rate decision, due on Wednesday.

The U.S. dollar index bounced from its session lows on the data, trading at 88.355, still off 0.33 percent on the day. The dollar erased early losses to trade up 0.18 percent at 118.85 yen.

However, the euro maintained its lead on the greenback, trading off its highs for the day but still up 0.31 percent at $1.2446.

Norway's crown plunged the day after its central bank unexpectedly cut interest rates to boost growth as oil prices slid further.

The dollar hit 7.3950 crowns on Friday, its strongest since September 2003, before slipping to 7.3574, up 0.95 percent on the day.

Lower oil prices undermined the Canadian dollar. The greenback rose 0.45 percent to C$1.1571, a 5-1/2 year high against the loonie.

—By Reuters

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