Tuesday May 13, 09:22 PM
Dollar strengthens despite discomfiting data, record oil
NEW YORK (AP) - The dollar strengthened against most major currencies Tuesday despite gloomy U.S. economic data and record oil and gas prices.
The 15-nation euro fell to $1.5480 in late New York trading from $1.5540 late Monday. The British pound declined to $1.9459 from $1.9566.
The dollar also climbed to 105.26 Japanese yen, up from 104.17 yen late Monday.
The U.S. Commerce Department reported Tuesday that retail sales fell 0.2 percent in April, as expected by economists. But excluding sales of automobiles, the sales rose 0.5 percent, which was better than expected.
'The euro is pressured by strong core U.S. sales despite the decline in U.S. retail sales,' Ashraf Laidi, chief currency strategist at CMC Markets USA, wrote in a research note.
The Commerce Department also said business inventories rose only 0.1 percent in March, the smallest growth in a year and below economists' estimates.
Oil and gas prices also continued to hit new records, compounding worldwide inflationary worries.
A weak dollar helps drive up oil prices, which are priced in the American denomination.
Federal Reserve Chairman Ben Bernanke, speaking at a conference on Tuesday, said that turmoil in financial markets has eased somewhat, but the situation is still 'far from normal.' He did not discuss the Fed's next interest rate move, however.
The Fed has lowered its rates seven times in seven months to 2 percent, a major factor in the dollar's sag against the euro. But many investors expect that the Fed is done easing for the near future.
Though lower interest rates can spur a nation's economy, they can weigh on its currency as traders transfer funds to countries where they can earn higher returns -- and interest rates are higher in Europe.
In other New York trading, the dollar rose to 1.0529 Swiss francs from 1.0444 francs, but fell to 1.0033 Canadian dollars from 1.0050 late Monday.
Copyright 2008 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.
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