EUR Higher Against Dollar Wednesday, Despite Debt Crisis Fears

The euro moved higher against the U.S. dollar Wednesday, as ongoing eurozone debt crisis fears and disappointing U.S. economic data weighed on market sentiment. Depressing the greenback, The Commerce Department reported U.S. retail sales declined by a seasonally adjusted 0.2% in May, falling for the second successive month, marking the first back-to-back- decline in two years. April’s figure was revised to a 0.2% decline from a previously reported gain of 0.1%.

Core retail sales, which exclude automobile sales, fell by 0.4% last month, the biggest decline since May 2010. A separate report showed that U.S. producer price inflation fell 0.2% in May, the largest monthly decline since July 2009. The weak data added to expectations that the Federal Reserve may implement a third round of easing to shore up economic growth after Chicago Fed President Charles Evans reiterated his support for additional monetary stimulus on Tuesday. Meanwhile, official data showed that industrial production in the eurozone fell 0.8% in April, down for the second consecutive month, underlining fears over the health of the region’s economy.
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GBP/USD
The pound edged lower against the U.S. dollar on Wednesday, as a flurry of weak U.S. economic reports and sustained concerns over Spain’s financial troubles dampened market sentiment. The Commerce Department said U.S. retail sales declined by a seasonally adjusted 0.2% in May, falling for the second successive month, marking the first back-to-back- decline in two years. April’s figure was revised to a 0.2% decline from a previously reported gain of 0.1%. Core retail sales, which exclude automobile sales, fell by 0.4% last month, the biggest decline since May 2010. A separate report showed that U.S. producer price inflation fell 0.2% in May, the largest monthly decline since July 2009. Also Wednesday, official data showed that industrial production in the eurozone fell for the second consecutive month in April, underlining fears over the health of the region’s economy.
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USD/JPY
The U.S. dollar erased gains against the yen on Wednesday, pulling away from a three-day high as disappointing U.S. economic data weighed on the greenback while concerns over Spain’s financial troubles continued to weigh on market sentiment. The Commerce Department said U.S. retail sales fell by a seasonally adjusted 0.2% in May, falling for the second successive month and marking the first back-to-back decline in two years.

Core retail sales, which exclude automobile sales, fell by 0.4% last month, the biggest decline since May 2010. Ahead of the Bank of Japan’s two-day policy meeting this week, Governor Masaaki Shirakawa said earlier that the central bank is pursuing powerful monetary easing to achieve its 1% inflation goal and will carefully assess the effect of Europe's debt woes on the economy. The comments came after government data showed that core machinery orders in Japan rose more-than-expected in April, climbing 5.7% after a 2.8% fall the previous month. Analysts had expected core machinery orders to rise 2% in April.
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USD/CAD
The U.S. dollar hit a session high against its Canadian counterpart on Wednesday, as the release of disappointing U.S. retail sales data fuelled speculation over a third round of monetary easing by the Federal Reserve. The Commerce Department said U.S. retail sales fell by a seasonally adjusted 0.2% in May, falling for the second successive month and marking the first back-to-back- decline in two years. April’s figure was revised to a 0.2% decline from a previously reported gain of 0.1%. Core retail sales, which exclude automobile sales, fell by 0.4% last month, the biggest decline since May 2010. The loonie, as the Canadian dollar is also known, was lower against the euro, with EUR/CAD adding 0.30% to hit 1.2871. Later in the day, the U.S. was to publish official data on crude oil stockpiles.
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