Thursday December 14, 2006 - 11:30:46 GMT
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INVESTICA Ltd - www.investica.co.uk
Spark of dollar hope
The dollar traded in narrow ranges ahead of the US retail sales data before strengthened sharply after the data. The US currency strengthened to 1.32 from around 1.3265 and held the bulk of the gains later in US trading, although there was important Euro buying interest below 1.32 with the dollar in a 1.32-1.3250 range on Thursday.
US retail sales rose 1.0% in November compared with expectations of a 0.2% increase while there was an underlying 1.1% increase. Gasoline sales recovered over the month and there was also a solid increase in building materials sales which is likely to lead to some greater degree of confidence over the housing and construction sectors.
It will be dangerous to read too much into a single piece of data, but the robust sales report should ease pessimism over the economy and could be important in reversing expectations of a first-quarter cut in interest rates. The report may also lead to a less negative reading of Tuesdayâ€™s Federal Reserve statement while the rise in bond yields will offer some dollar protection.
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