The dollar strengthened to a one- week high against the euro Thursday as U.S.
retail sales advanced in May more than economists forecast, raising
speculation the Federal Reserve will increase borrowing costs this
year. U.S. retail sales
increased 1 percent in May as Americans used their tax rebates to shop,
the Commerce Department reported. That followed a revised 0.4 percent
advance the prior month. The median forecast of 82 surveyed economists
was for a 0.5 percent increase.
Traders
bet Fed policy makers are more likely to raise borrowing costs in
August. Fed funds futures on the Chicago Board of Trade show a 60
percent probability the central bank will increase the target lending
rate by at least a quarter- percentage point, compared with a 7 percent
chance a week ago.
The U.S. currency was supported by
speculation that finance ministers from the Group of Eight countries
might make comments discouraging the currency's decline at two days of
meetings in Osaka, Japan, this weekend. G-8 officials
will urge emerging nations to stop subsidizing oil consumption and
press regulators, notably in the U.S., to look into the trading that
has driven crude oil to a record, said French Finance Minister
Christine Lagarde.
EUR/USD fell from $1.5560 to $1.5380. Later rebound followed till $1.5450.
GBP/USD
sunk from $1.9635 to $1.9435 rebounding further to $1.9470.
USD/JPY rose from Y106.80 to Y108.06.
European
data for Friday starts at 0600GMT with the final May CPI and HICP data
from Germany where both are expected to come in at 0.6% m/m, 3.0% y/y.
Eurozone data at 0900GMT sees Q1 employment data and Q1 labor
costs,which are seen rising 2.9%.
US data starts at 1230GMT, when CPI is expected to rise
0.5% in May, as energy prices are expected rebound after the seasonally
adjusted decline in the previous month. Food prices are forecast to be
more modest in the month after posting the largest monthly gain in 18
years. Core CPI is forecast to rise 0.2% in the month after the very
tame 0.1% reading in April.
US data concludes at 1355GMT when the Reuters/University of Michigan
Consumer Sentiment Index is expected to rise very modestly to 60.0 in
early-June.