Dollar dips after rise in U.S. retail sales


By Kate Duguid

NEW YORK, July 16 (Reuters) - The safe-haven U.S. dollar fell modestly in morning trading on Thursday after domestic retail sales data for June came in better than expected, though the move was limited by jobless claims and a drop in U.S. equities.

Retail sales in June increased for the second consecutive month, according to a report from the Commerce Department. The U.S. dollar index =USD, which measures the currency against a basket of six rivals, was last down 0.07% to 95.940.

A separate report from the Labor Department on Thursday showed 1.3 million people filed for state unemployment benefits during the week ending July 11, slightly down from 1.31 million in the prior period. The report nevertheless showed that a resurgence in new COVID-19 cases was chipping at the budding recovery.

The three major U.S. stock indexes all fell as a result, with the S&P 500 index .SPX last down 0.64%.

"The data in general was pretty constructive on U.S. retail sales. I think however that for foreign exchange, things haven't really changed," said Mazen Issa, senior foreign exchange strategist at TD Securities.

That is, he explained, because since the bottom in the stock market on March 23, foreign exchange markets have been highly correlated with equities.

"The data in and of itself hasn't been a focal point for currency markets, it has really been about risk asset performance. And that has been motivated by the notion that as poor as the data may be in future months, that you have a fiscal and monetary backstop. There is a lot of faith being placed in central banks and the collapse in forex volatility has been reflective of that."

The euro was little moved by the outcome of the European Central Bank meeting, last trading up 0.10% to $1.142 EUR=.

The meeting was seen as something of a non-event by analysts, who said it was overshadowed by the EU summit, at which European countries are expected to vote on a 750 billion euro ($856 billion) recovery fund to revive euro area growth.

"Going into the weekend a lot of focus will be on the EU leaders' summit, a lot of focus on that recovery fund," said Issa.

(Reporting by Kate Duguid in New York and Olga Cotaga in London; Editing by Bernadette Baum)

((kate.duguid@thomsonreuters.com; +646-223-6118; Reuters Messaging: kate.duguid@thomsonreuters.com@thomsonreuters.net))

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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