FOREX-Dollar rallies after stronger U.S. consumer data

NEW YORK, Dec 11 (Reuters) - The dollar rose to a two-month high against the euro on Friday after stronger-than-expected U.S. consumer data boosted expectations the Federal Reserve would raise interest rates sooner rather than later.

U.S. retail sales posted the largest advance since August last month, while consumer sentiment improved in early December, stoking optimism about a recovery in the world's largest economy.

"More of this data will have people thinking the Fed may raise rates a little bit faster than initially expected, which means access to cheap money will start to wind down," said Melvin Harris, market strategist at Easy Forex in New York.



The prospect of prolonged low U.S. interest rates has undermined the dollar in recent months as investors borrow in the low-yielding greenback and reinvest the money in stocks, commodities and higher-yielding currencies in search of returns.

In mid-morning trading, the euro fell as low as $1.4600 EUR=, the lowest since early October, and last traded at $1.4606, off 0.9 percent. It was partly weighed down by persistent concerns over the fiscal situation in Greece after a ratings agency downgraded the country's credit rating earlier this week.