Dollar climbs after poor European retail sales

Saturday July 04, 2009

LONDON: The dollar climbed against the euro Friday after eurozone retail figures slipped back into a rut and as fresh worries about the health of the US economy supported the ‘safe-haven’ greenback. In late afternoon trading here, the European single currency weakened to 1.3987 dollars from 1.3997 dollars in New York late on Thursday. Against the Japanese currency, the dollar also edged up to 96.00 yen from 95.94 yen on Thursday while the euro rose to 134.44 yen from 134.30 previously. Trading activity was limited however because US currency markets were closed for a public holiday ahead of the July 4 Independence Day celebrations. "The June US jobs report provoked disappointment and a subsequent sell-off in risk assets," said Mitul Kotecha, an analyst with French bank Calyon. referring to weaker-than-expected unemployment data released on Thursday. Investors bought the dollar after US job losses surged to 467,000 in June, lifting the unemployment rate to a 26-year high of 9.5 percent. The greenback is seen as a relatively safe bet in times of turmoil. The disappointing data suggest "unemployment will continue to rise, creating a mood of distrust over the green shoots of recovery," said Daisuke Uno, a market strategist at Sumitomo Mitsui Banking Corp. The jobs report, seen as one of the best indicators of economic momentum, was worse than market forecasts for 365,000 job losses in June. The previous month, the number of layoffs had fallen to 322,000. Adding to the disappointing economic outlook, official EU data showed retailers in the 16 nations using the euro saw their sales fall in May, renewing a slump that was broken in April by a short-lived improvement. The volume of retail sales in the eurozone dipped 0.4 percent in May over one month and 3.3 percent over one year, the Eurostat data agency said. The result wiped out a minor improvement booked in April when retail sales finally rose after months of steady decline, edging up 0.1 percent over one month and reducing the fall over one year to 2.5 percent. The retail report balanced out more optimistic figures from Europe last week that showed business and consumer confidence in the 16-member eurozone jumped to a six-month high in May while German unemployment declined. On Thursday, the European Central Bank kept its main interest rate steady at a record low of 1.0 percent as ECB chief Jean-Claude Trichet downplayed the threat of deflation in the eurozone in the face of a fall in prices. In trading here on Friday, the euro was changing hands at 1.3987 dollars against 1.3997 dollars late on Thursday, 134.44 yen (134.30), 0.8573 pounds (0.8538) and 1.5208 Swiss francs (1.5182). The dollar stood at 96.00 yen (95.94) and 1.0860 Swiss francs (1.0844). The pound was at 1.6336 dollars (1.6390). On the London Bullion Market, the price of gold rose to 932.50 dollars an ounce at the fixing from 929.50 dollars an ounce late on Thursday. (AFP)