Dollar falls as US retail sales tumble
Sunday, 15 July 2007
NEW YORK, July 14 (AFP): The dollar lost value against other world currencies Friday after a government report revealed a surprise decline in US retail sales last month.
The report, which showed a 0.9 per cent drop in retail sales for June, heightened concerns about US economic growth and lessened the odds of US interest rate hikes anytime soon.
The euro was trading at 1.3781 dollars around 2100 GMT, little moved from 1.3787 dollars late Thursday, but the euro had shot over 1.38 dollars in earlier activity for the first time since its creation in 1999.
The euro breached the 1.37 dollar-level for the first time Tuesday and has increased over one per cent against the dollar in the past week.
The dollar meanwhile weakened against the British pound and the Japanese yen.
In late New York trade, the dollar was quoted at 121.90 yen, down from 122.40 yen a day earlier. The pound traded at 2.0343 dollars, up from 2.0302 dollars. The pound has been riding 26- year highs against the dollar in recent days.
The dollar was quoted at 1.2023 Swiss francs, little moved from 1.2028 late Thursday.
The dollar stumbled after the Commerce Department said retail sales fell by the biggest margin in almost two years in June as American consumers cut their spending amid a persistent housing slump.
Stripping out vehicle sales from the June report, retail sales dropped 0.4 per cent. Most analysts had expected sales excluding autos to rise 0.2 per cent.
The surprise decline in retail sales, the sharpest since August 2005, is likely to disappoint the Federal Reserve which is banking on improved economic performance after US growth slowed to 0.7 per cent in the first three months of 2007.
Earlier Friday, the euro hit a record high of 168.95 yen on expectations that Japanese interest rates will remain low for some time, in contrast with the prospect of higher eurozone borrowing costs in the coming months.
"Interest rate differentials are weighing heavily on sentiment towards the yen," said Masaki Fukui, a senior market economist at Mizuho Corporate Bank.
The report, which showed a 0.9 per cent drop in retail sales for June, heightened concerns about US economic growth and lessened the odds of US interest rate hikes anytime soon.
The euro was trading at 1.3781 dollars around 2100 GMT, little moved from 1.3787 dollars late Thursday, but the euro had shot over 1.38 dollars in earlier activity for the first time since its creation in 1999.
The euro breached the 1.37 dollar-level for the first time Tuesday and has increased over one per cent against the dollar in the past week.
The dollar meanwhile weakened against the British pound and the Japanese yen.
In late New York trade, the dollar was quoted at 121.90 yen, down from 122.40 yen a day earlier. The pound traded at 2.0343 dollars, up from 2.0302 dollars. The pound has been riding 26- year highs against the dollar in recent days.
The dollar was quoted at 1.2023 Swiss francs, little moved from 1.2028 late Thursday.
The dollar stumbled after the Commerce Department said retail sales fell by the biggest margin in almost two years in June as American consumers cut their spending amid a persistent housing slump.
Stripping out vehicle sales from the June report, retail sales dropped 0.4 per cent. Most analysts had expected sales excluding autos to rise 0.2 per cent.
The surprise decline in retail sales, the sharpest since August 2005, is likely to disappoint the Federal Reserve which is banking on improved economic performance after US growth slowed to 0.7 per cent in the first three months of 2007.
Earlier Friday, the euro hit a record high of 168.95 yen on expectations that Japanese interest rates will remain low for some time, in contrast with the prospect of higher eurozone borrowing costs in the coming months.
"Interest rate differentials are weighing heavily on sentiment towards the yen," said Masaki Fukui, a senior market economist at Mizuho Corporate Bank.