Investing.com - The dollar steadied against its rivals at 13-month highs Wednesday, but gains were limited by rising demand for safe-haven yen on fears turmoil in Turkey could spill over into other markets.
The U.S. dollar index, which measures the greenback against a trade-weighted basket of six major currencies, rose by 0.05% to 96.60.
The lira rose sharply against the dollar for the second-straight day as Turkey doubled tariffs on some U.S. imports, including alcohol, cars and tobacco in retaliation for U.S. moves.
The rise in the lira did little to ease investor concerns as analysts warned that while Turkey may take measures to support the lira, the country's economy would likely plunge into a recession.
"A recession is on the horizon in Turkey, but the depth of the recession depends on the measures taken," ABN Amro said. "Lower growth, higher interest rates and on balance a weaker currency would still make it difficult for certain [Turkish] companies to fulfill their external debt obligations, but a national debt crisis would be avoided.".
Concerns over Turkey saw demand for the safe-haven yen and Swiss franc increase, keeping gains in the greenback in check.
USD/JPY fell 0.40% to 111.72, while USD/CHF fell 0.01% to 0.9940.
A duo of economic reports on retail sales and regional manufacturing pushed the dollar to an intraday high, but the greenback struggled to hold gains.
The Commerce Department said on Wednesday that retail sales rose 0.5% last month, but June's retail sales was revised downward. The retail sales control group -- which has a larger impact on U.S. GDP -- rose 0.5%, beating expectations for a 0.4% rise.
The Empire State manufacturing index rose 5.30 points in August to a reading of 25.60, the New York Federal Reserve said Wednesday. That was its highest reading in 10 months.
Elsewhere, bargain hunters scooped up the euro as it plunged to one-year low intraday against the dollar.
EUR/USD fell 0.02% to $1.1343, after trading as low as $1.1301.
GBPUSD fell 0.18% to $1.2701, while USD/CAD rose 0.64% to C$1.3142.