Dollar Falls Most in One Week as Retail Sales Trail Forecast

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The dollar fell the most in more than a week after retail sales gained less than forecast last month, fueling speculation the Federal Reserve is in no hurry to start raising interest rates.

The greenback snapped a six-day rally against the euro as a less-robust rebound in the consumer sector combined with below-forecast jobs growth to add to concern the slowdown in economic growth may reflect more than the harsh U.S. winter season. The U.S. currency almost reached a 12-year high Monday versus the 19-nation euro as investors look for clues on the timing of the first Fed rate increase since 2006.

“The numbers have led to some more dollar consolidation,” Mark McCormick, a foreign-exchange strategist at Credit Agricole SA in New York, said by phone. “The data we see from the first quarter, thus far, is that the economy is weak.”

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, fell 0.7 percent to 1,199.97 at 5 p.m. New York time. That’s the biggest drop on a closing basis since April 3.

The U.S. currency declined 0.8 percent to $1.0655 per euro. It strengthened to $1.0458 on March 16, the strongest since January 2003. The currency fell 0.6 percent to 119.40 yen.

Dollar Rally

The dollar has gained 21 percent during the past 12 months, according to the Bloomberg Correlation-Weighted Index, driven by projections the Fed will raise interest rates this year, while central banks around the global add to monetary stimulus.

The greenback rally lost momentum after policy makers signaled on March 18 they’ll raise borrowing costs at a pace slower than previously estimated. Government reports this week are projected to show that industrial production contracted last month and the rise in consumer prices remains well below the central bank’s 2 percent target.

“The dollar’s taking a little bit of a beating,” said Fabian Eliasson, who works in foreign-exchange sales at Mizuho Financial Group Inc. in New York. “Weaker data supports a longer wait for rate increase.”

Fed Chair Janet Yellen said March 27 she expects to raise rates this year, and that subsequent increases will be gradual. Policy makers have held their main lending rate at zero to 0.25 percent since 2008 to support the economy.

Sales at U.S. retailers increased 0.9 percent in March, less than the 1.1 percent forecast in a Bloomberg survey. Sales excluding autos rose 0.4 percent after being little changed in February,

Retail sales “didn’t quite meet expectations,” Chris Gaffney, president at EverBank World Markets in St. Louis, said in a telephone interview. “The dollar’s off. Higher retail sales would have shown that the June date may have been put right back in front and center on the table again but, right now, it looks like the June date is being pushed off again.”

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