The dollar rose for the first time
in four days against the euro as retail sales excluding autos increased in April more than forecast,
raising speculation the Federal Reserve will stop cutting borrowing costs. The U.S. currency
appreciated versus the Australian dollar and the Swiss franc as Cleveland Fed
President Sandra Pianalto cited the risk of inflation. The yen fell against the
Canadian dollar, the South African rand and the Brazilian real as reduced
currency volatility encouraged investors to buy higher-yielding assets funded
by low-cost loans in Japan.
The pound dropped as much as 0.8%, the lowest since Feb. 21, as London's property market
had the most widespread price declines last month in at least 14 years, while
inflation in April was the highest since 2002. The Bank of England held its
target lending rate at 5 percent on May 8.
Retail sales excluding autos in the U.S.
rose 0.5 percent last month, following a revised 0.4 percent increase the
previous month, the Commerce Department said in Washington. The median forecast of 74 economists
surveyed was for a 0.2 percent increase. Total sales fell 0.2 percent, as
economists forecast.
Futures on the Chicago Board of Trade show a 94 percent chance the Federal
Reserve will hold its target lending rate at 2 percent at its next meeting on June
25, compared with 86 percent odds yesterday. The balance of bets is for a cut
of a quarter-percentage point. There's a 22 percent chance of an increase to
2.25 percent in September.
Fed Chairman Ben S. Bernanke told an Atlanta Fed conference in Sea Island, Georgia,
that financial markets remain unsettled and the central bank will increase its
auctions of cash to banks as needed.
EUR/USD printed lows around $1.5430. Bids around $1.5435/25 helped the rate to rebound to $1.5520.
GBP/USD rose sharply after strong inflation report but soon retreated back to lows near $1.9453, then – to $1.9417. Further rate held near $1.9492.
USD/JPY printed lows near Y103.40 before it rebounded to Y103.80/00.
Today’s focus on US data, including consumer prices. Analysts predict Core CPI rose 0.2% in April.