The dollar is rebounding against all major counterparts as signs that U.S. economic growth is picking up pace spurred bets that the Federal Reserve will increase its target interest rate sooner than some analysts expect. Interest rate futures show a 44.5 percent chance the Fed will raise the rate by June, from 31.4 percent odds a month ago.

The dollar traded near a three-month high against the euro amid signs the economic recovery is accelerating and as concern some European nations may struggle to pay their debts bolstered demand for the U.S. currency. The Swiss franc traded near its strongest level in nine months versus the euro amid speculation the central bank has relaxed its stance on the currency’s appreciation.

Pound retreat almost 300 pips as the pair broke 1.6190 support area, to hit a fresh 2-month low on the back of an unexpected decline on U.K Retail sales. UK retail sales have declined in November for their first time in the last 6 months; 0.3 against market expectations of a 0.6% monthly increase.

The yen rose against higher-yielding currencies such as the Australian dollar amid speculation Japan’s exporters are bringing home earnings. Large Japanese manufacturers expected the yen to average 91.16 per dollar in the six months to March 2010, according to the Bank of Japan’s quarterly Tankan survey. Against the U.S. dollar ended the week quoting over 90 continuing the last week depreciation.