US dollar strengthens on new retail sales data

Story link: US dollar strengthens on new retail sales data

New retail sales data in the United States sent the dollar higher on Wednesday. The figures show that sales were 1.4 percent higher in May, much higher than the 0.7 percent gain that was expected. The gain, to the highest level in almost a year and a half, raised expectations that US interest rates will go up either later this year or early in 2008.

After a slight decline in afternoon trade, the greenback was still 0.1 percent higher in relation to the euro to $1.3290, while it added 0.2 percent to SFr1.2445 versus the Swiss franc and gained 0.6 percent to ¥122.48 against the yen.

Sterling weakened on the day after new figures showing that growth in earnings is lagging behind fairly high inflation levels. The pound dropped 0.1 percent versus both the greenback and the euro, to $1.9730 and £0.6740 respectively. However, sterling did manage an 0.5 percent advance against the yen, to ¥241.32 as investors continued to sell the yen to finance carry trades.

The yen also dropped 0.5 percent against the euro to ¥162.66, while it fell 0.6 percent to ¥102.77 in relation to the Australian dollar and was 0.8 percent lower to ¥91.75 versus the New Zealand dollar.