Investors await Federal Reserve statement on rates, monetary policy
By Deborah Levine and Polya Lesova, MarketWatch
NEW YORK (MarketWatch) — The dollar recovered from pre-U.S. losses on Tuesday after a government report showed the nation’s retail sales rose far less than expected last month.
Auctions and economic data out of Europe had weighed on the currency, while traders are playing it close to the vest ahead of a policy decision from the Federal Reserve’s interest-rate setting committee.
The dollar index DXY -0.03% , which measures the performance of the greenback against a basket of six currencies, turned up to 79.565 from 79.533 in late North American trading on Monday.
The euro EURUSD +0.01% slipped to $1.3177, down from $1.3199 earlier and versus $1.3188 on Monday.
Sales at U.S retailers increased a seasonally adjusted 0.2% in November, the Commerce Department said — less than half the gain forecast by analysts. See story on retail sales.
“The data confirm the weekly retailer data, which show that there was a flurry of activity around Black Friday that faded quickly,” said Steven Ricchiuto, chief economist at Mizuho Securities. “Consumers will buy what is cheap but do not have deep pockets for the impulse sales that drive the holidays.”
The Federal Open Market Committee will end its monetary-policy meeting with a statement issued at 2:15 p.m. Eastern. It’s expected to keep U.S. rates on hold. Read recent story on Fed meeting.
While not expecting any big surprises, “the Fed may sound a little more positive in light of firmer data over recent weeks,” said Credit Agricole strategists.
Earlier, the euro rose after the ZEW indicator of economic sentiment for Germany rose by 1.4 points in December, to a minus-53.8 reading.
Also, the European Financial Stability Facility, the euro-zone’s government bailout fund, received a reassuring level of demand in its first sale of short-dated debt. Read about EFSF auction.
On Monday, the shared currency touched its lowest level in about two weeks. See story on dollar on Monday.
“There is still some way to go before a turning point in the euro crisis is reached. One reason being the apparent lack of firepower to support sovereign bonds, particularly from the European Central Bank,” the Credit Agricole strategists said.
Also Tuesday, the British pound GBPUSD +0.03% traded at $1.5569, compared to $1.5584 late Monday, as the dollar USDJPY -0.15% bought 77.86 Japanese yen, compared with ÂĄ77.96.
Deborah Levine is a MarketWatch reporter, based in New York.
Polya Lesova is chief of MarketWatch’s London bureau. Sarah Turner in Sydney contributed to this report.
