Friday May 11, 2007 - 20:45:42 GMT
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FOREX NEWS-Dollar slips against the euro, hurt by U.S. data
FOREX-Dollar slips against the euro, hurt by U.S. data
Fri May 11, 2007 4:17 PM ET
(Recasts, updates prices)
NEW YORK, May 11 (Reuters) - The dollar slipped against the euro on Friday, weighed down by a surprise decline in U.S. retail sales and benign core producer prices, which bolstered the view the economy is losing momentum.
Despite the decline, the dollar maintained narrow ranges and analysts said the currency enjoyed some support as investors were becoming increasingly convinced the Federal Reserve will not cut interest rates any time soon, given its emphasis on inflation.
That view was reinforced by the Fed's statement on Wednesday in which it said it remains focused on seeing price pressures ease more, although it kept interest rates steady at 5.25 percent.
"We need more news to change the direction of the dollar," said Enrico Caruso, chief currency trader at Tempest Asset Management in Newport Beach, California. "The market is still grappling with what transpired on Wednesday and there has not been much of a shift in sentiment either way."
Late afternoon in New York, the euro traded at $1.3529 , up 0.3 percent from late on Thursday.
Despite the euro's gains, markets were careful not to push the single currency significantly higher, given the dollar's persistent strength this week on the back of soft global equity markets, which has led investors to cut back on their exposure to risk.
For the week the euro was down 0.5 percent against the dollar, according to Reuters data, the worst five-day trading period for the euro zone currency since the week ended March 11.
The dollar index <.DXY>, a measure of the greenback's value against a basket of six major currencies, was up around 0.4 percent on the week, its biggest weekly increase in two months.
Data showed on Friday that U.S. retail sales fell 0.2 percent in April, while producer prices rose 0.7 percent, but excluding food and energy costs, prices were unchanged.
"Not good news for the buck either way, but markets should have priced in most of this bad news for retail sales," said Andrew Busch, global market strategist at BMO Capital Markets in Chicago.
Against the yen, the dollar turned higher to 120.10 yen . The dollar's recovery against the yen was mainly fueled by gains in the euro versus the Japanese currency, traders said. The euro last traded at 162.52 yen , up 0.5 percent.
The yen had risen earlier in the session, tracking the Chinese yuan, which hit a post-revaluation high on speculation about an interest rate hike in China. The yuan rose as high as 7.6750 before finishing the day up 0.2 percent, marking its second-biggest one-day percentage rise since the yuan was revalued in July 2005.
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