BOE's economic outlook sinks British pound
The U.S. dollar gained ground on the euro but slipped versus the Japanese yen as U.S. April retail sales data failed to provide further evidence of green shoots of an economic recovery.
April retail sales dropped a seasonally adjusted 0.4%, the eighth decline in the past 10 months, the Commerce Department estimated Wednesday. Economists had forecast a small rise. See full story.
The data lifted the dollar and the Japanese yen, which have both shown a strong tendency to rise on safe-haven flows during periods of economic uncertainty.
"In short, there is no momentum in spending; the freefall is over but shredded balance sheets and declining incomes mean a broadly flat trend is about the best we can expect. Greens shoots [are] withering," wrote Ian Shepherdson, economist at High Frequency Economics.
The dollar index a measure of the greenback against a trade-weighted basket of six major currencies, traded at 82.391, up from around 82.317 ahead of the report and from 82.267 in late North American trade on Tuesday. Earlier Tuesday, the index hit a four-month low near 82.00.
The euro slipped versus the dollar and traded at $1.3603 in recent action, down from $1.3631 ahead of the data.
The Japanese yen was broadly higher but trimmed initial gains versus the dollar. A greenback fetched 96.08 yen, little changed from where it traded ahead of the data.
The British pound, meanwhile, tumbled after the Bank of England's quarterly inflation report offered a downbeat assessment of the U.K. economic outlook, forecasting growth to continue to contract over 2009 before returning to growth in 2010. The pound traded at $1.5125, down from $1.5265 late Tuesday.
