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Dollar extends gains after strong UoM report

Published 05/13/2016, 10:46 AM
Dollar continues  to climb, reaches 2-1/2 week highs
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Investing.com - The dollar extended gains against the other major currencies on Friday, as the release of upbeat U.S. consumer sentiment added to optimism over the strength of the ecomomy.

In a preliminary report, the University of Michigan said its consumer sentiment index rose to 95.8 im May from April’s reading of 89.0. Analysts had forecast a rise to 90.0 this month.

The data came after the U.S. Commerce Department said retail sales increased by 1.3% last month, compared to expectations for a rise of 0.8%. Retail sales for March dropped 0.3%.

Core retail sales, which exclude automobile sales, increased by 0.8% in April, beating forecasts for an advance of 0.5%.

A separate report showed that U.S. producer price inflation rose by 0.2% in April, compared to expectations for a 0.3% gain, after a 0.1% slip the previous month. Year-on-year, producer prices were flat.

Core PPI, which excludes food and energy, ticked up 0.1% last month, in line with expectations.

EUR/USD slid 0.71% to 1.1295.

The euro weakened after official data showed that the single currency bloc’s gross domestic product rose to 0.5% in the first quarter, from 0.3% in the preceding quarter.

That was below the initial reading of 0.6% released on April 29 and consensus that was expecting no change.

Year-on-year, GDP in the single currency bloc rose 1.5%, also below the initial estimate, the fourth quarter reading and analyst forecasts for growth of 1.6%.

USD/JPY edged up 0.11% at 109.18.

Bank of Japan Governor Haruhiko Kuroda said on Friday that the central bank will act "decisively" to achieve its 2% inflation target, stressing that it still has "ample" policy options available if it were to expand stimulus again.

The dollar was higher the pound and the Swiss franc, with GBP/USD down 0.73% at 1.4342 and with USD/CHF gaining 0.64% to 0.9765.

The Australian and New Zealand dollars were lower, with AUD/USD down 0.91% at 0.7258 and with NZD/USD declining 0.85% to 0.6761.

Earlier Friday, Statistics New Zealand said retail sales rose 0.8% in the first quarter, disappointing expectations for an increase of 1.0%. Core retail sales, which exclude automobiles and gas stations, increased by 1.0% in the last quarter.

Elsewhere, USD/CAD advanced 0.86% to trade at 1.2954.

The commodity-related loonie weakened as oil prices moved lower on Friday, after Russia warned that a global crude supply glut could last into next year.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 0.68% at 94.76, the highest since April 27.

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