LONDON, March 21: The euro fell back from an overnight peak above $0.8850 on Thursday as investors readied for US inflation data that could give the dollar another upward nudge.

The single European currency was quoted at 0.8840 dollars from 0.8854 overnight. The dollar meanwhile was quoted at 131.58 yen from 131.44 earlier in Asian trading.

The dollar is once again the darling of the market, because investors believe that the US economic recovery will arrive earlier and prove more robust than any turnarounds elsewhere in the world.

If US data continue to see the trend we have been seeing over the past few weeks where it is steadily improving, it could be supportive for the US equity markets and for the dollar, said Paul Mackel, a currency expert with Dresdner Kleinwort Wasserstein.

Inflation data due for release later on Thursday, the US consumer price index (CPI), could provide further clues as to the prospect for recovery and rate hikes, he noted. Analysts were predicting monthly inflation of 0.2 per cent.

At the end of June this year we see the dollar trading around 84 cents to a euro, he told AFP.

Sterling meanwhile pushed up against both dollar and euro on Thursday after surprisingly strong retail sales figures showed that the British consumer has not given up the ghost after all.

Sterling was quoted at 1.6181 euros and $1.4306 after the data, which revived talk of interest rate hikes.

The euro was being traded at $0.8840 compared with $0.8854 late Wednesday, 116.36 yen (116.33), 0.6178 pounds (0.6197) and 1.4650 Swiss francs (1.4644).

The dollar was worth 131.58 yens (131.36) and 1.6564 Swiss francs (1.6540).

Sterling bought 1.4315 dollars (1.4279), 188.33 yen (187.66) and 2.3707 Swiss francs (2.3624).

On the London Bullion Market, the price of gold rose to 292.45 dollars an ounce from $291.85 late Wednesday.—AFP