Dollar retreats on weak U.S. retail sales
The greenback pared its gains against other currencies on Monday as the weaker-than-expected U.S. retail sales implied the Federal Reserve will continue its stimulus measures this year. At New York midday, the single currency was briefly pressured to 1.3034 after Fitch downgraded credit rating of the European Financial Stability Facility (EFSF) from 'AAA' to 'AA+'.
Versus the Japanese yen, although the greenback dropped briefly to 99.06 in thin Asian trading as Japan's financial markets were closed for holiday, active cross-selling of yen versus euro pushed the pair to a high at 100.49 in New York morning but price then retreated to 99.79 after the release of worse-than-expected U.S. retail sales
U.S. retail sales in June came in at 0.4% m/m, worse than the expectation of 0.8%, previous reading was revised to 0.5%.
The single currency ratcheted higher to 1.3079 at Asian midday but then fell to 1.2992 in European session on dollar's broad-based firmness. However, the release of weak U.S. retail sales lifted the pair and price later climbed to 1.3077 in U.S. afternoon.
Although the British pound edged higher to 1.5127 at Asian midday, the pair fell in tandem with euro as well as corss-sellng in sterling to sesson low of 1.5028 in Europea but then staged a strong short-covering rebound to 1.5117 in New York morning on dollar's broad-based weakness before retreating to 1.5077 at U.S. midday.
In other news, ECB's Asmussen said 'monetary policy will remain expansive as long as necessary; keeping interest rates low for too long carries risks.' Fed's Tarullo said 'mid-spring market rate rise tied to better economy; "no one" on FOMC talking about selling Fed assets; focused on whether economy can weather fiscal drag; transparency helps clarify path of monetary policy.' Spain Economic Minister Guindos said 'Spain starting to see light at the end of tunnel; Spain can't afford to ease pace to struct reforms; 2Q GDP close to zero, see growth in 2H.'
Data to be released on Tuesday :
New Zealand CPI, Australia RBA minutes, U.K. CPI, PPI, RPI, ONS house price, German ZEW economic sentiment, current condition, Italy trade balance, EU ZEW economic sentiment, trade balance CPI, U.S. CPI, retail sales, net LT TIC flows, industrial production, capacity utilization, NAHB housing market index.