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The dollar weakened against the majority of its most-traded counterparts as U.S. retail sales fell less than forecast, damping demand for haven assets.
The U.S currency rose against the yen and Swiss franc after the retail sales report, which followed data this month showing slowing manufacturing and rising unemployment. Currencies of commodity-exporting countries, such as the Canadian and Australian dollars, rose the most against major peers as raw material prices gained.
Retail purchases in the U.S. fell 0.2 percent in May, following a 0.3 percent increase in April, Commerce Department figures showed today in Washington. The median forecast of economists called for a 0.5 percent decrease.
Wholesale costs in the U.S. rose more than forecast in May, led by higher prices for fuel, plastics and the fastest rise in 30 years for apparel and textile costs.
“That the data is not negative actually has a big market impact; we’ve seen dollar-yen move higher,” said Jens Nordvig, a managing director of currency research in New York at Nomura Holdings Inc. “Better U.S. data is positive for U.S. growth and therefore supportive of Canada versus the dollar and supportive of Aussie versus the dollar.”
The Thomson Reuters/Jefferies CRB Index of commodities rose 0.2 percent and the Standard & Poor’s 500 Index gained 1.2 percent.
Earlier China reported increased retail sales and industrial output, spurring appetite for risk.
China’s retail sales rose 16.9 percent last month, while industrial production increased more than economists forecast, the statistics bureau reported. The 5.5 percent increase in China’s consumer-price index was the fastest in almost three years. Lenders were ordered to set aside more cash as reserves.
Today’s data offset concern the fastest-growing major economy is cooling. New loans in China tumbled in May and money supply grew at the slowest pace since 2008, the central bank reported yesterday.
“If you look at the trade numbers that came out of China they are still importing quite a bit,” said Kathy Lien, director of currency research with online currency trader GFT Forex in New York. “That means their demand remains strong and Aussie and kiwi are natural beneficiaries.”
The Swiss franc dropped versus all of its major counterparts as the government lowered its forecast for 2012 economic growth and said further currency appreciation poses risks to its outlook.
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