* Dollar higher across the board 
    * British pound knocked by sour market mood

 (Updates to U.S. afternoon)
    By Saqib Iqbal Ahmed
    NEW YORK, Jan 15 (Reuters) - The U.S. dollar rose across the
board to hit a four-week high against a basket of currencies on
Friday, as data showing the COVID-19 pandemic's continuing toll
on the economy boosted demand for the safe-haven currency.
    U.S. retail sales fell for a third straight month in
December amid job losses and renewed measures to slow the spread
of COVID-19, the Commerce Department reported on Friday, further
evidence the economy lost speed at the end of 2020.  urn:newsml:reuters.com:*:nL1N2JP2H6
    The weak data dragged U.S. Treasury yields lower and U.S.
stocks fell as investors turned more risk-averse on Friday.
    "I feel that after all the optimism regarding vaccines, we
are now living the reality of a very slow (vaccine) rollout,
which is weighing heavily on business activity," said Juan
Perez, senior currency trader at Tempus Inc in Washington.
    "Until we have more guarantees on the medical front, markets
will not continue to flourish despite whatever financial aid may
be on the way," Perez said.
    Democratic President-elect Joe Biden on Thursday revealed a
nearly $2 trillion proposal to address the COVID-19 pandemic and
its economic harm that included $20 billion for vaccine
distribution and $50 billion for testing. It builds on the $982
billion COVID-19 relief bill passed in December, more than
tripling the funding allocated to state and local governments
for vaccine distribution.  urn:newsml:reuters.com:*:nL1N2JP3A1
     The U.S. Dollar Currency Index  =USD  was 0.56% higher at
90.773, on pace to finish the week up 0.8%, its best weekly
showing in 11 weeks.
    Rising coronavirus infections also curbed risk appetite, as
daily cases in China hit their highest in more than 10 months.
 urn:newsml:reuters.com:*:nL1N2JQ017
    France will tighten its COVID-19 border controls and bring
its curfew forward by two hours, while German Chancellor Angela
Merkel said she wanted "very fast action" to counter the spread
of virus variants after Germany had a record number of deaths.
 urn:newsml:reuters.com:*:nL1N2JP22H urn:newsml:reuters.com:*:nL8N2JP29K
    The dollar's rebound from three-year lows, which began last
week, may have some more room to run if the state of the economy
worsens, but the currency's longer-term outlook remained weak,
analysts said.
    Data on Friday also showed U.S. producer prices rose
moderately in December, suggesting that an anticipated pickup in
inflation in the coming months will probably not be worrisome.
 urn:newsml:reuters.com:*:nL1N2JP26V
    "While short-term, the U.S. dollar could extend further, the
big-picture backdrop for the dollar remains negative," MUFG
currency strategist Derek Halpenny wrote in a note to clients.
    Despite the recent rise in the dollar, speculators increased
their net short dollar positions in the latest week, according
to calculations by Reuters and U.S. Commodity Futures Trading
Commission data released on Friday.  urn:newsml:reuters.com:*:nL1N2JQ2HZ
    The deteriorating global risk backdrop sent sterling
 GBP=D3  0.8% lower, though data showing Britain's November
lockdown was less damaging for the economy than expected kept a
floor under the currency.  urn:newsml:reuters.com:*:nL1N2JQ0OY

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GRAPHIC: World FX rates    https://tmsnrt.rs/2RBWI5E
GRAPHIC: Citigroup Economic Surprise Index    https://tmsnrt.rs/3qlS8tg
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 (Reporting by Saqib Iqbal Ahmed; Editing by Steve Orlofsky and
Jonathan Oatis)
 ((saqib.ahmed@thomsonreuters.com; @SaqibReports; +1 646 223
6054; Reuters Messaging:
saqib.ahmed.thomsonreuters.com@reuters.net))