FOREX-Dollar rises on bullish data, euro's fall

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

(Recasts, new throughout; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, Aug 16 (Reuters) - The dollar rallied on Friday on
bullish economic data and hit a two-week high against the euro
as expectations of central bank stimulus weighed on the single
currency.
U.S. homebuilding fell for a third straight month in July
amid a steep decline in the construction of multi-family housing
units, but a jump in permits to a seven-month high offered hope
for the struggling housing market. Better-than-expected retail
sales data in the United States on Thursday also encouraged
buying of the dollar. "Any downturn in the U.S. economy appeared on a further
rather than closer horizon after bullish retail spending data
this week suggested America's main growth engine had ample
horsepower to extend the record-long expansion," said Joe
Manimbo, senior market analyst at Western Union Business
Solutions.
The euro fell 0.14% to $1.1090 EUR= , shy of the two-year
low of $1.1025 it reached on Aug. 1. Friday's fall was caused by
growing expectations of an interest rate cut by the European
Central Bank after Governing Council member Olli Rehn suggested
on Thursday that the central bank could restart its quantitative
easing program and was open to extending it into equity
purchases.
"Global markets started Friday in a better mood with
sentiment boosted by expectations for the European Central Bank
to err on the side of bold stimulus as soon as central bankers'
coming meeting on Sept. 12," said Manimbo.
The biggest move against the dollar was in Norway's crown,
which dropped to more than a 17-year low of 9.0375 against the
greenback in early Friday trading NOK= .
The crown extended its selloff after the Norges Bank said on
Thursday its plan for an interest rate rise this year was now
more uncertain. Norway's currency has been falling fast since
June as the price of oil - its principal export - has tumbled
and as fears of weaker global growth and tougher trade relations
have weighed on the Norwegian economy.
Measured against a basket of six other major currencies
.DXY , the dollar was higher by 0.05% at 98.195. It has
recovered by 1.25% from its three-week low on Aug. 9.
Data showing U.S. consumers kept spending in July came as a
relief after the Treasury yield curve inverted this week, which
historically has preceded U.S. recessions The inversion stoked worries about the impact of the
Sino-U.S. trade war. The curve was slightly steeper on Friday at
4.7 basis points US2US10=TWEB .

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Strong correlation between oil price and Norwegian crown since
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