By Polya Lesova and Michael Kitchen, MarketWatch
NEW YORK (MarketWatch) — The euro rose against the U.S. dollar Monday, as investors mulled prospects that the European Central Bank may intervene in bond markets to lower borrowing costs for Spain and Italy.
The euro EURUSD +0.5532% climbed to $1.2355 in recent trade, up from $1.2287 late Friday.
“Euro gains were across the board, but we expect further appreciation to be capped in the $1.2335-50 area,” said currency strategists at Brown Brothers Harriman in a note to clients.
In recent sessions, investors have traded the euro on expectations that the European Central Bank may buy sovereign bonds soon in order to reduce borrowing costs for Spain and Italy. But when and whether it will act remain uncertain, and optimism over that prospect has varied in recent days.
The ICE dollar index DXY -0.28% , which tracks the greenback against six other major currencies, slipped to 82.287 from the 82.541 level late Friday.
The WSJ dollar index XX:BUXX -0.29% , which uses a wider comparison basket of currencies, slipped to 71.43 from 71.61.
Meanwhile, the Japanese yen was little changed. The dollar USDJPY +0.1188% bought ÂĄ78.33 after the market shrugged off worse-than-expected April-through-June data on economic growth. Read more on Japanese growth data.
No major U.S. economic data are due Monday. A report on retail sales for July is set for release on Tuesday; economists surveyed by MarketWatch held a median expectation that sales would rise 0.2%, which would be a reversal after dropping 0.5% in June.
However, analysts at RBC Capital Markets tipped the result to come in better than the consensus view, “largely a function of the fact that we have been on a major losing streak in retail sales and that back-to-school shopping looks likely to be firmer than recent history.”
Still, they said that a strong gain for U.S. retail sales would “add to the muddied water” in terms of whether the Federal Reserve will embark on another round of quantitative easing in September.
In other currencies trading, the British pound GBPUSD +0.2808% edged up to $1.5708, while the Australian dollar AUDUSD -0.1018% fell to $1.0552 from late Friday’s $1.0572.
Polya Lesova is MarketWatch's New York deputy bureau chief.
Michael Kitchen is Asia editor for MarketWatch and is based in Los Angeles.
