Sun, Jul 15, 2007 - Page 10 News List

US dollar slips on surprise drop in retail sales

AP , NEW YORK

The US dollar lost value against other world currencies on Friday after a government report revealed a surprise decline in US retail sales last month.

The report, which showed a 0.9 percent drop in retail sales for last month, heightened concerns about US economic growth and lessened the odds of US interest rate hikes anytime soon.

Around 9pm GMT the euro was trading at US$1.3781, little moved from US$1.3787 late Thursday, but the euro had shot past US$1.38 in earlier activity for the first time since its creation in 1999.

The euro breached the US$1.37 level for the first time on Tuesday and has increased over one percent against the dollar in the past week.

The dollar meanwhile weakened against the British pound and the yen.

"Bearish undertones continued to plague the US dollar during the New York session following rather lackluster US economic reports," said Richard Lee, a currency analyst at Forex Capital Markets.

Other analysts agreed.

"More bad news for the greenback," CIBC economist Audrey Childe-Freeman said.

"Overall, a weaker than expected performance for the US retail sector and while the poor weather [and higher gasoline prices] may have something to do with it, this remains a soft data," Childe-Freeman observed.

The dollar stumbled after the US Commerce Department said retail sales fell by the biggest margin in almost two years last month as US consumers cut their spending amid a persistent housing slump. Stripping out vehicle sales from the report for last month, retail sales dropped 0.4 percent. Most analysts had expected sales excluding autos to rise 0.2 percent.

The surprise decline in retail sales, the sharpest since August 2005, is likely to disappoint the Federal Reserve, which is banking on improved economic performance after US growth slowed to 0.7 percent in the first three months of this year.

In late New York trading, the US dollar was quoted at ?21.90, down from ?22.40 a day earlier. The pound traded at US$2.0343, up from US$2.0302. The pound has been riding 26-year highs against the dollar in recent days.

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