Dollar inches up against major currencies

16 Jul, 2004

The dollar edged up against other major currencies on Thursday but movements were limited as traders waited for US producer price data for more hints about the direction of US interest rates.
The dollar had eased in New York trade on Wednesday after US retail sales figures showed consumer spending slowing, the latest in a run of lukewarm US data.
Analysts attribute weaker consumer spending in part to higher energy prices and most are unconcerned about its effect on the US Federal Reserve's goal of raising rates at a "measured" pace.
"Basically we don't see energy prices rising much higher, and the US economy will be resilient," said Tohru Sasaki, chief currency strategist at J.P. Morgan Chase in Tokyo, doubting that the recent weak data would affect the timing of rate rises.
The dollar rose as high as 109.60 yen and was fetching 109.30 yen, up slightly from around 109.16 in late New York trade.
The euro was at $1.2365 versus $1.2385. It moved in a narrow 1.2360-1.2390 range during Tokyo trade.
US retail sales fell 1.1 percent in June, worse than economists' forecasts of a 0.6 percent fall. Excluding a large decline in auto sales, retail purchases fell 0.2 percent.
Investors are looking for any signs that US inflationary pressure is gathering pace, which would probably prompt the Fed to be more aggressive in raising interest rates.
Traders say moderate rate increases could diminish the allure of dollar-denominated assets to foreign investors.
The focus is on the US producer price report for June, due at 1230 GMT. Economists in a Reuters poll expected a rise of 0.2 percent in the key index, compared with a rise of 0.8 percent in May.
Investors were also waiting for US initial jobless claims data, the New York Fed manufacturing survey for July and June industrial output figures, all due later in the day.
"If the data (on Thursday) is softer, I think the weaker dollar trend will continue. And I think that kind of trend will finally have an effect against the yen," said Sasaki of J.P. Morgan.

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