Dollar Declines after U.S. Retail Sales in May Grew Slower than Forecasted

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Dollar Declines after U.S. Retail Sales in May Grew Slower than ForecastedThe dollar declined against major counterparts after U.S. retail sales recorded much slower growth than the market had expected, indicating that economic growth remains uneven.

The Bloomberg Dollar Spot Index, which monitors the greenback versus 10 advanced-economy peers, fell 0.2 percent to 1,012.07 in midday trading in New York.

The dollar also fell on report that fresh applications for unemployment insurance surprisingly increased last week, spurring speculation that the Federal Reserve will retain its record low interest rates in order to boost the economy.

The yen rallied to the strongest level in four months against the euro after the Bank of Japan opened its monthly policymakers meeting. The yen rose 0.1 percent to trade at 138.04 per euro and hit its highest level since February 6. The yen also gained 0.2 percent to 101.883 a dollar, while the euro surged 0.2 percent to $1.3555.

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“There is a slight squaring of long U.S. dollar positions going through, leading to gains in the euro-dollar off the $1.3512 lows,” Douglas Borthwick, a New York-based head of foreign exchange at Chapdelaine & Co. told Bloomberg. “Retail sales are a weak number, and jobless claims are once again creeping higher. The market is firm in the consensus that interest rates will remain low for some time.”

The New Zealand dollar rose the fastest in four months after the central bank hiked interest rates and signaled that it will increase once again in future. The kiwi surged 1.6 percent to 86.82 U.S. cents, posting its strongest advance since February 4.

U.S. retail sales rallied 0.3 percent in May, compared to 0.5 percent in April, reported the Commerce Department on Thursday. The Labor Department also reported that unemployment claims rose by 4,000 in the week ending June 7. To register for a free 2-week subscription to ForexMinute Premium Plan, visit www.forexminute.com/newsletter.

To contact the reporter of this story; Jonathan Millet at john@forexminute.com