Dollar gains on strong U.S. retail sales data

Posted by Reuters

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(Reuters) – The dollar gained across the board on Thursday, helped by an upbeat U.S. retail sales report that suggested recovery in the world’s largest economy is on stable footing.

That report, however, does not alter expectations for how soon the Federal Reserve will start reducing its economic stimulus, analysts said. Market participants still expect the Fed to pare back its asset purchases no later than March and this has been reinforced after Thursday’s weaker-than-expected U.S. jobless claims data.

U.S. retail sales rose 0.7 percent in November, while initial jobless claims rose 68,000 to 368,000 last week, the largest weekly increase November 2012.

“The strong U.S. retail sales number was definitely a positive factor for the dollar. This could lead to some upward revisions in the gross domestic product for the fourth quarter,” said Brian Dangerfield, currency strategist at RBS Securities in Stamford, Connecticut.

The rise in jobless claims was a result of seasonal factors given last week’s big drop due to the Thanksgiving holiday, he added.

“I think the market is looking at today’s outsized increase in jobless claims as not necessarily an indication of a weakening U.S. labor market,” he said.

In early New York trading, the dollar index .DXY rose 0.2 percent to 80.071, gaining after three days of losses.

The euro fell 0.2 percent against the dollar to $1.3762, ending a seven-day winning streak. It has gained nearly 4 percent since November 11 and is close to its 2013 peak of $1.3832.

The dollar advanced 0.5 percent versus the yen to 102.90, rising after two days of losses. The euro also gained, up 0.4 percent at 141.65 yen, not far from a five-year peak of 142.17 yen.

The Swedish crown, meanwhile, was a big mover of the day, falling to a 1-1/2 year low against the euro after data bolstered the case for a rate cut by Sweden’s Riksbank. The euro, however, remained supported by higher money market rates and year-end repatriation by banks.

The Swedish crown fell to its lowest since May 2012 at 9.0749 crowns per euro after inflation data showed falling price pressures with jobless numbers also painting a grim picture about the Swedish economy.

“The market is extrapolating the data will see some action from the Riksbank next week. This is driving down the crown,” said Jeremy Stretch, head of currency strategy at CIBC World Markets in London.


The Swiss franc rose against the euro, helped by year-end flows into safe-haven Switzerland. It shrugged off comments from the Swiss National Bank, which reiterated its commitment to the euro/franc peg of 1.20 euros.

The euro fell to a seven-month low of 1.2197 francs, while the dollar climbed 0.2 percent to 0.8879 franc.

“Investors are concerned about the impact on risk appetite of Fed tapering and this could underpin the Swiss franc,” said Jane Foley, senior currency strategist at Rabobank.

“Also, given the recent increase in disinflationary pressures in the euro zone, it seems likely that ECB interest rates will also remain at rock bottom for longer. This indicates that there is less reason for euro/Swiss to appreciate soon,” she said.

(Additional reporting by Anirban Nag in London; Editing by Meredith Mazzilli)