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US Dollar Tumbles as Retail Sales Disappoint

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US Dollar Tumbles as Retail Sales Disappoint

The US dollar edged lower against a basket of rivals Thursday after retail sales advanced at a slower rate than forecast and jobless claims unexpectedly rose.

The US dollar index, a broad performance measure of the greenback’s performance against six major peers, declined 0.2 percent to 80.63. The index had enjoyed three consecutive days of advances between June 6 and June 11.

In economic data, US retail sales advanced 0.3 percent in May, half the rate anticipated by the consensus, the Commerce Department reported today in Washington. April retail sales were revised upward to 0.5 percent.

Retail sales excluding automobiles advanced 0.1 percent, after an upwardly revised gain of 0.4 percent in April. Economists forecast core sales to advance 0.4 percent in May.

The Commerce Department also said April business inventories increased at their sharpest pace in six months, further adding to expectations GDP growth is rebounding sharply in the second quarter. Business inventories increased 0.6 percent in April after rising 0.4 percent the prior month. Economists forecast a gain of 0.4 percent.

US jobless claims increased 4,000 to a seasonally adjusted 317,000 in the week ended June 7, according to the Labor Department. The four-week moving average rose from 310,500 to 315,250.

Disappointing retail sales figures weren’t enough to diminish optimism about the US recovery, which has shifted into high gear in the second quarter. Last week the Labor Department confirmed US employers added 217,000 nonfarm payrolls in May, following a revised gain of 282,000 in April.

The EURUSD rebounded Thursday, advancing 0.12 percent to 1.3547. The pair faces initial support at 1.3516 and resistance at 1.3553.

On the release front, Eurozone industrial production accelerated in April, the European Commission reported today. Industrial production rose 0.8 percent, double the rate of forecasts. Year-on-year, industrial production was up 1.4 percent.

The British pound rebounded sharply against the dollar, retaking the 1.68 level. The GBPUSD rose 0.28 percent to 1.6838. The trend line shows initial support at 1.6747 and resistance at 1.6821.

The US dollar declined for a second consecutive day against its Canadian counterpart. The USDCAD recovered from an intraday low of 1.0841 to consolidate at 1.0850, declining 0.16 percent. The pair is currently testing initial support at 1.0849. On the upside, resistance is likely found at 1.0898, right around the 20-day average.

On the release front, Statistics Canada said new house prices increased 1.6 percent in the 12 months through April.

The USDJPY tumbled for the fourth time this week, declining 0.17 percent to 101.83. The pair is testing initial support at 101.82. Below this level support is likely found at 101.56. On the upside, the pair is likely to face resistance at 102.37.

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