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Weak Retail Sales Send US Dollar Tumbling

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Weak Retail Sales Send US Dollar Tumbling

The US dollar tumbled against a basket of its major competitors, as weak retail sales data capped off a slow start to the year.

The greenback fell sharply against most of its major peers, sending the US dollar index to 80.36, a loss of nearly 0.5 percent. The losses were triggered after yet another gauge of consumer spending unexpectedly declined last month. Retail sales fell 0.4 percent in January, as frigid temperatures weighed on economic activity. Core retail sales, which exclude automobiles, gasoline, building materials and food services, declined 0.3 percent, official data showed today.

The US dollar was unable to hold its early rally versus the Canadian dollar. As of 19:00 GMT, the USDCAD pair was down 38 pips to 1.0957. The price of new homes in Canada rose 0.1 percent in December and at an annual rate of 1.3 percent, the government’s statistics agency reported today. Statistics Canada will close out the week with a report on manufacturing shipments.

Europe’s common currency soared versus the dollar, as the forex market found a short-term buying opportunity. The EURUSD pair soared more than half a percent to 1.3672, offsetting yesterday’s losses amid forecasts the Eurozone economy will rebound in 2014. A survey of professional forecasters courtesy of the European Central Bank said the Eurozone economy will expand 1 percent this year and 1.5 percent next year, despite subdued inflation expectations over the next three years.

The dollar was also weaker against the yen, falling more than 0.3 percent. The USDJPY fell below 102 before consolidating at 102.18 in North America’s afternoon session.

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