The U.S. dollar fell against its major counterparts in the European session on Friday, as recent weak economic data supported hopes of policy easing by the Federal Reserve next year.

Data this week showed that U.S. jobless claims rose to a three-month high last week, retail sales fell for the first time in seven months in October and industrial production fell more than expected in the month.

Soft U.S. data fuelled speculation that the Fed may start cutting rates sooner than expected next year.

U.S. treasury yields continued to drop on hopes of an interest rate cut in May.

In U.S. economic news, the Commerce Department released a report showing an unexpected increase in new residential construction in the month of October.

Housing starts jumped by 1.9 percent to an annual rate of 1.372 million in October after surging by 3.1 percent to a downwardly revised rate of 1.346 million in September.

Economists had expected housing starts to dip to a rate of 1.350 million from the 1.358 million originally reported for the previous month.

Building permits also shot up by 1.1 percent to an annual rate of 1.487 million in October after plunging by 4.5 percent to a revised rate of 1.471 million in September.

Building permits were expected to decrease to a rate of 1.450 million from the 1.475 million originally reported for the previous month.

The greenback dropped to 1.2440 against the pound and 1.0884 against the euro, from its early 3-day highs of 1.2373 and 1.0824, respectively. The next possible support for the greenback is seen around 1.27 against the pound and 1.12 against the euro.

The greenback declined to 0.5997 against the kiwi and 0.6512 against the aussie, down from its early 3-day highs of 0.5940 and 0.6452, respectively. The greenback is seen finding support around 0.62 against the kiwi and 0.67 against the aussie.

The greenback was down against the franc, at 0.8861. Against the loonie, it fell to 1.3710. Next immediate support for the greenback is seen around 0.87 against the franc and 1.34 against the loonie.

The greenback touched 149.19 against the yen, hitting a 2-week low. If it drops further, it may find support around the 144.00 area.

Grafico Cross US Dollar vs CAD (FX:USDCAD)

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Grafico Cross US Dollar vs CAD (FX:USDCAD)

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