The dollar strengthened for a second day against the yen before a report that economists said will show U.S. retail sales rose in June, adding to the case for the Federal Reserve to reduce monetary stimulus. Australia’s currency strengthened against all but one of its 16 major peers after a report showed growth in China, its top trading partner, matched economists’ estimates in the second quarter. The Bloomberg Dollar Index last week posted its first drop in a month after Fed Chairman Ben S. Bernanke, who is scheduled to testify on monetary policy this week, signaled that bond buying won’t be dialed back soon. Financial markets in Japan were closed today for a national holiday. “Markets will look to buy dips in the dollar,� said Jeremy Stretch, head of currency strategy in London at Canadian Imperial Bank of Commerce, the fifth-most accurate currency forecaster in a Bloomberg Rankings survey for the second quarter. “We will see a weekly squeeze back to the topside as far as dollar-yen is concerned provided we don’t get any nasty surprises from Bernanke.� The dollar added 0.5 percent to 99.75 yen at 10:32 a.m. London time, following a 0.3 percent gain on July 12. It strengthened 0.3 percent to $1.3032 per euro after rising 0.2 percent on the final day of last week. The euro strengthened 0.3 percent to 130 yen. The U.S. currency slid to 98.27 yen on July 11, the weakest since June 27. Any move back toward 99 yen would provide a buying opportunity, according to Stretch. ‘Recovering Trend’ The U.S. Commerce Department will say today that retail sales rose 0.8 percent in June, according to the median estimate of economists surveyed by Bloomberg News. It would be the fastest gain since February. “The U.S. economy looks to be on a recovering trend,� said Mike Jones, a Wellington-based currency strategist at Bank of New Zealand Ltd. “The trend, we think, is for a stronger U.S. dollar given our expectation that tapering will come in this year.� The Fed buys $85 billion of Treasuries and mortgage debt each month as part of its quantitative-easing program to cap borrowing costs, a program that typically debases the currency. Bernanke on July 10 damped speculation that the Fed would slow its bond-buying program. “Highly accommodative monetary policy for the foreseeable future is what’s needed in the U.S. economy,� he said that day. Bernanke will deliver a semi-annual monetary policy report to Congress on July 17-18. Aussie Dollar The Bloomberg Dollar Index, which tracks the greenback against 10 other major currencies, rose 0.2 percent. It lost 1.6 percent last week, the biggest slide since June 7. The Aussie jumped 0.5 percent to 90.90 U.S. cents. It advanced against all its major counterparts apart from South Africa’s rand, strengthening most versus the yen and the Swiss franc. China’s official Xinhua News Agency corrected a report from last week that cited Finance Minister Lou Jiwei as saying the country’s growth target this year is 7 percent, a figure lower than the official goal of 7.5 percent set in March. In an English-language story released July 13, Xinhua said it corrected a quote attributed to Lou to “there is no doubt that China can achieve this year’s growth target of 7.5 percent.� China’s gross domestic product grew 7.5 percent in the April-June period, the National Bureau of Statistics said in Beijing today, matching the median estimate of economists in a Bloomberg survey. It expanded 7.7 percent in the first quarter. “At the margin, the Chinese GDP data is supportive for the Aussie given the exaggerated growth fears prompted by the Chinese finance minister’s comments late last week,� said Sue Trinh, a senior currency strategist at Royal Bank of Canada in Hong Kong. The Reserve Bank of Australia is scheduled to release the minutes from its July policy meeting tomorrow. To contact the reporters on this story: Lucy Meakin in London at lmeakin1@bloomberg.net; Masaki Kondo in Singapore at mkondo3@bloomberg.net To contact the editor responsible for this story: Paul Dobson at pdobson2@bloomberg.net

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