Reuters: US Dollar Report: FOREX-Dollar holds firm after robust U.S. retail sales

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FOREX-Dollar holds firm after robust U.S. retail sales May 14th 2013, 00:20 Mon May 13, 2013 8:20pm EDT * Dollar index near 5-week high * Robust U.S. data fans Fed's QE exit expectations * Yen near 4 1/2-year low * Euro hampered by fresh talk of negative interest rates By Hideyuki Sano TOKYO, May 14 (Reuters) - The dollar held firm near five-week high against a basket of major currencies on Tuesday after U.S. retail sales data eased fears of a slowdown in the world's largest economy. The yen held near 4 1/2-year low against the U.S. currency as Group of Seven finance officials meeting over the weekend held back from criticising Japan's monetary policy. The dollar index hit a five week high of 83.438 on Monday and last stood at 83.217, with resistance seen at its April high of 83.494. Against the yen, the dollar fetched 101.79 yen in early Asian trade, down about 0.15 percent from late U.S. levels but still not far from 4 1/2-year high of 102.15 yen set on Monday. "At the moment there seems to be a lot of profit-taking around 102 yen. But there is no change in the trend," said a trader at a Japanese bank. The greenback was boosted by data showing U.S. retail sales unexpectedly rose in April as households bought automobiles, building materials and a range of other goods, pointing to underlying strength in the economy. "The dollar/yen may be consolidating around 100-102.50 yen for now. But if upcoming U.S. economic data is strong, the dollar could pick up momentum again," said Hiroshi Maeba, head of FX trading at UBS in Tokyo. This week will see a raft of U.S. data, including Wednesday's industrial production, Thursday's housing starts and consumer sentiment data on Friday. The increase in core sales, coming on the heels of relatively strong job growth over the last three months, strengthened expectations the U.S. Federal Reserve could scale back its asset-buying programme later this year. That stance stands out as many of the world's other central banks are looking to loosen their policy, with the Bank of Japan just into one month of its massive two-year stimulus plan. European Central Bank policymaker Ignazio Visco said on Monday the central bank may opt for negative deposit rates, pushing the euro near its five-week low. If the ECB did push its deposit rate into negative territory, banks would effectively be charged for parking spare cash they do not lend, and gives investors strong incentives not to hold euro cash. The euro traded at $1.2983, near five-week low of $1.2935 hit on Friday. With the Fed's possible exit from stimulus becoming a key focus, market players will be closely looking to comments from Fed speakers later this week. Federal Reserve Bank of Philadelphia President Charles Plosser will be speaking at 0600 GMT. Chairman Ben Bernanke will deliver testimony on May 22 before the Joint Economic Committee of Congress. Elsewhere, the Australian dollar wobbled near 11-month low of $0.9940 hit on Monday as the currency also faces headwinds from a fall in commodity prices. The Aussie last stood at $0.9967, little changed from late U.S. levels. Link this Share this Digg this Email Reprints

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