Dollar gains on economic reports, bad news abroad
NEW YORK — The dollar reversed course Wednesday, gaining broadly as U.S. retail sales took a turn for the worse and news from abroad highlighted the recession’s impact in Europe.
The 16-nation euro dropped to $1.3614 in late New York trading from $1.3643 late Tuesday in New York.
Earlier in the session, the euro had hit a fresh multi-month high against the buck. The dollar has been dropping against the euro this month amid a rally in stocks, UBS analysts say. Investors, hopeful that the worst of the recession is over, are putting some of the cash they have been keeping on the sidelines into equities.
An unexpected month-over-month drop in U.S. retail sales indicates that consumers remain shaky and pulled markets lower Wednesday, boosting the dollar’s appeal.
In the U.S., the Commerce Department said that retail sales dropped 0.4 percent last month from March. Analysts had expected spending to remain flat. A recovery in consumer spending, which accounts for two-thirds of the U.S. economy, is necessary for a healthy economy.
The Dow Jones industrials were down about 2 percent in late trading.
A report from the European Union’s statistics office said that industrial production in the euro zone countries shrank 2 percent in March from February, which also boosted the buck. The decline was double what had been expected.
The British government on Wednesday said it is more pessimistic about an economic recovery in 2010 than it was three months ago.
The British pound slipped to $1.5171 from $1.5272, coming off its highest level against the dollar since mid-December.
In other late trading, the dollar slid to 95.52 Japanese yen from 96.43 yen late Tuesday, but rose to 1.1061 Swiss francs from 1.1057 francs. The buck gained to 1.1746 Canadian dollars from 1.1619.
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