The dollar ended little changed on Wednesday after reaching a 13-month peak against a basket of currencies as investors briefly added to their safe-haven holdings of the greenback on worries about slowing Chinese growth and Europe's exposure to Turkey.
Upbeat figures on domestic retail sales, manufacturing output and worker productivity also supported the greenback and the view of steady U.S. economic growth. The dollar's initial gains faded as the euro recovered following news that Qatar pledged to invest $15 billion in Turkey.
This move is seen supportive of Turkey's banking system and reduced anxiety about European banks' exposure in Turkey. It helped euro to rebound from a 13-month trough versus the dollar and Swiss franc.
Qatar's financial commitment, together with planned talks between Turkish and German officials and hopes to an end to the tension between Ankara and Washington, "are euro-positive developments," said Juan Perez, senior currency trader at Tempus Consulting in Washington.
The Turkish lira sank to a record low earlier this week, prompted by concerns over President Tayyip Erdogan's economic policies and diplomatic and trade disputes with the United States, a NATO ally.
The ICE index that tracks the dollar against six major currencies was flat at 96.710 in late U.S. trading after rising to 96.984 earlier, the highest since June 2017.
The euro hit $1.13010, the lowest in 13 months before moving up to $1.13430, flat on the day. The single currency was steady at 1.12790 Swiss franc, EBS data showed.
Sterling reached a 13-1/2 month low versus the dollar despite data showing Britain's inflation rate picked up in July for the first time this year. It was down 0.2 percent at $1.2696.
The Chinese yuan sagged nearly 0.8 percent to 6.9512 per dollar in offshore trading, hitting its weakest level since January 2017. The yuan's latest weakness followed a batch of disappointing economic data earlier this week.
That stoked speculation whether the People's Bank of China would intervene or Beijing would introduce more fiscal stimulus to stem its currency from breaking through the 7-yuan mark.
"There's some talk of some stimulus, but we don't know what it would look like," said Ilya Gofshteyn, FX and global macro strategist at Standard Chartered Bank in New York.
The Turkish lira rose for a second day on central bank liquidity measures and Qatar's investment pledge, even as it doubled tariffs on some U.S. imports, including alcohol, cars and tobacco in retaliation for U.S. sanctions.
The lira has recovered roughly 12 percent to 6.04 per dollar after hitting a record low of 7.24 on Monday. It remained 40 percent lower versus the greenback this year.
Other emerging market currencies stumbled again, with the South African rand losing over 2 percent and the Indian rupee lingering near an all-time low.
The MSCI emerging currency index fell to its lowest since July 2017 as the sector's key currencies' losses grew.
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