FOREX-Dollar edges down; set for best week in three weeks on stimulus uncertainty

* U.S. retail sales beat expectations
* Sterling edges higher in volatile trading

(New throughout, updates prices, market activity, comments to
U.S. market open; new byline, changes dateline; previous LONDON)
By Saqib Iqbal Ahmed
NEW YORK, Oct 16 (Reuters) - The dollar edged lower against
a basket of currencies on Friday, giving back some of the week's
gains built on increased caution over a global surge in
coronavirus cases and fading prospects for a U.S. stimulus
package before the Nov. 3 election.
The greenback pared some of the day's losses after strong
U.S. retail sales data helped assuage concerns about the health
of the U.S. consumer.
The U.S. dollar index =USD was 0.2% lower at 93.616. The
index is up 0.6%, for the week, its best weekly gain in three
weeks.
Fresh restrictions to combat COVID-19 have been introduced
across Europe, and the U.S. Midwest is battling spikes in new
cases, threatening to derail the country's economic recovery
from the coronavirus shock. In the United States, relief plans remain bogged down in a
three-way negotiation between the White House, Senate
Republicans and House Democrats. The Japanese yen was headed for weekly gain of 0.3% against
the greenback as investor appetite for safe haven assets remains
strong. JPY=EBS
U.S. retail sales increased more than expected in September.
"The unexpectedly strong 1.9% rise in retail sales last
month suggests the economy was carrying more momentum into the
fourth quarter than anticipated, defying fears that the expiry
of enhanced unemployment benefits in the summer would harm the
economy," Michael Pearce, a senior U.S. economist at Capital
Economics, said in a note.
"But with new coronavirus infections on the rise, we are not
rushing to revise up our forecast that GDP growth will slow to
4% annualised in the fourth quarter," he said.
Sterling, gave up the bulk of its early gains to trade
slightly higher on the day in a choppy session on Friday, after
British Prime Minister Boris Johnson told businesses to get
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Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E
Dollar index - weekly change https://tmsnrt.rs/352uedb
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