By Olga Cotaga
LONDON, July 16 (Reuters) - The U.S. dollar strengthened on Thursday as investors focused on poor Chinese retail sales instead of its stronger than expected economic growth in the past quarter, with the focus now shifting more to a European Union summit this weekend.
The euro remained untouched by the outcome of the European Central Bank meeting, with monetary policy left unchanged after taking a series of unprecedented measures over the past four months to salvage an economy that is fighting the biggest recession in living memory because of the COVID-19 pandemic.
The meeting was seen as something of a non-event by analysts, who said the ECB announcement will be overshadowed by the EU summit, at which European countries are expected to vote on a 750 billion euro ($856 billion) recovery fund to revive euro area growth.
The ECB conference is due to start at 1230 GMT.
The euro was last trading 0.1% down at $1.1401 EUR=EBS, but against the safe-haven Japanese yen the dollar rose 0.2% to 107.10 JPY=EBS.
The British pound, remaining strongly correlated to risky assets, fell 0.3% to $1.2552 GBP=D3.
Surging U.S. coronavirus cases dampened sentiment and weighed on equity markets, which in turn supported the U.S. dollar, a proxy for global risk sentiment.
"No one really wants to buy a lot more (equities) here because they're concerned about a second wave of COVID, they're concerned about the pace of corporate earnings deterioration," said Stephen Gallo, European head of FX strategy at BMO Capital Markets.
"But equally, they don't want to be massively short either because they know the central banks are active, and I think that's probably one of the reasons why we're doing this back and forth."
Simmering U.S.-China tensions also added to broad-based dollar strength.
U.S. President Donald Trump has not ruled out additional sanctions on top Chinese officials over Beijing's crackdown on Hong Kong, a White House spokesman said on Tuesday.
The New York Times also reported that his administration is considering a sweeping ban on travel to the United States by Chinese Communist Party members, citing four unnamed people with knowledge of such discussions.
China's 3.2% economic growth in the past quarter easily beat market expectations of 2.5%. But an unexpected drop in retail sales - for a fifth straight month - was an unwelcome harbinger of possible problems ahead for the rest of the world.
The retail sales numbers show that China doesn't have much of a private consumption engine, Gallo said.
The growth-sensitive Australian dollar slipped below 70 cents after the data wa spublished. It was last down 0.3% at 69.84 against its U.S. counterpart AUD=D3.
Elsewhere, the Norwegian crown fell 0.4% against both the dollar and the euro to 9.3085 NOK=D3 and 10.62 EURNOK=D3 respectively.
($1 = 0.8762 euros)
(Reporting by Olga Cotaga Editing by Hugh Lawson and David Goodman )
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