Euro Hits New High Against Dollar
Source: The Wall Street Journal Online
By DAN MOLINSKI
July 13, 2007 11:38 a.m.
The euro surged to a fresh all-time high against the dollar early Friday in New York, after U.S. retail sales data came in even lower than expected.
The euro was at $1.3808 from $1.3781 at Thursday's close, while the dollar was at 121.94 yen compared with 122.50 yen. Sterling was at $2.0357 from $2.0297. The dollar was at 1.1994 Swiss francs from 1.2038 francs.
The euro climbed as high as $1.3813 after the data, marking the fourth consecutive day of record-setting highs against the greenback. That surpasses the previous high of $1.3799 set Thursday.
U.S. retail sales in June plunged 0.9% versus a revised 1.5% rise in May, and economists' expectations for a 0.1% decline.
The dollar has been under pressure all week amid concerns about the U.S. subprime mortgage mess and how this may affect the overall economy.
"Investors originally sold the dollar off after the data came in slightly lower than expected, because obviously the consumer is the main driver of the economy," said Grant Wilson, senior foreign exchange trader at Mellon Bank. "But while the euro did force its way through $1.38, (the dollar) is still not running away on the downside."
The retail sales data followed a rather quiet overnight session in which the dollar traded in tight ranges against its rivals. The greenback was unable to benefit from Thursday's surge in U.S. stock prices or the subsequent rise in global equities overnight.
Sterling, however, found some support overnight from comments on inflation by Bank of England Chief Economist Charlie Bean that helped cement expectations of more rate increases by England's central bank.
Mr. Bean said that it might be more prudent to respond to temporary pickups in inflation, rather that assume that the public will treat such an acceleration in price gains as transient.
"If there is a chance that private agents will treat the increase in inflation as a harbinger of raised inflation in the future too, then it probably makes sense for the central bank to be wary about accommodating even the first-round effects," Mr. Bean said.
Elsewhere, the New Zealand dollar was higher Friday after retail sales in New Zealand rose in May, rebounding from a decline in the previous month. Statistics New Zealand said seasonally-adjusted retail sales rose 1.2% in May from April, which was well above the median 0.5% rise forecast by economists. The New Zealand dollar was recently at $0.7870 from $0.7846.
The yen was rather steady in overnight trading, though the euro did briefly climb to a new all-time high of 168.95 yen. Against the dollar, the yen is trading a bit higher following the U.S. retail sales data, but it remains in rather tight ranges as investors try to gauge risk aversion levels.
"The market appears unsure of the direction in which to head as it attempts to reconcile broader dollar weakness with signs that the Bank of Japan is in no major hurry to raise rates and the latest decline in risk metrics," said Stephen Malyon, currency strategist at Scotia Capital.
--Jeff Bater in Washington contributed to this report.
Write to Dan Molinski at Dan.Molinski [a] dowjones.com
