Credit worries pull back the dollar after a sharp bounce

Today, the main focus will on the retail sales data from England at 9:30 GMT. In U.S Core PCE will be released at 13:30 GMT and later Consumer Sentiment, the data will provide inside look for the dollar performance. As well at 13:30 GMT Canada will

The dollar was under pressure on Friday in thin trade as a report that another U.S. investment bank could get a fund injection stirred worries about further losses at financial institutions from credit market turmoil. The U.S. currency stepped back from a two-month high against the euro and a basket of major currencies, and from a six-week high against the yen.

Trading volume was thinning ahead of next week's Christmas holiday overseas and a three-day weekend in Japan, and many players have closed their books for the year-end. Some traders said remaining position-squaring may lend some support to the dollar.

Merrill Lynch & Co Inc may get a capital infusion of up to $5 billion from Singapore state investor Temasek Holdings, the Wall Street Journal reported on Thursday. A Temasek capital infusion into Merrill would be the latest in a series by sovereign wealth funds into Western banks hurt by this year's credit crunch.

The Merrill fund infusion report refocused the market's attention on worries about U.S. financial institutions' losses from the credit market crisis and was negative for the dollar, traders said.
But some said the market reaction may not be necessarily one-way because fund injections to investment banks can be seen as relief rather than a cause of worries, because they offset
losses that had been incurred.

Earlier this week, China Investment Corp agreed to pump $5 billion into Morgan Stanley as the U.S. investment bank posted a fourth-quarter loss fuelled by $9.4 billion of losses in subprime mortgages and other assets.

Citigroup Inc agreed last month to sell a 4.9 percent stake to Abu Dhabi for $7.5 billion, while UBS accepted a $9.75 billion investment from the Government of Singapore Investment Corporation (GIC).

Today, the main focus will on the retail sales data from England at 9:30 GMT. In U.S Core PCE will be released at 13:30 GMT and later Consumer Sentiment, the data will provide inside look for the dollar performance. As well at 13:30 GMT Canada will publish GDP m/m.