U.S. data beat expectations, but corporate earnings anxiety limits gains.
NEW YORK (Reuters) -- The dollar dipped against the yen but edged up against the euro Tuesday as U.S. retail sales and producer price data beat expectations but anxiety about U.S. corporate earnings kept investors cautious.
A 33% rise in Goldman Sachs Group's (GS, Fortune 500) quarterly earnings also lifted some spirits, though market participants remained cautious ahead of reports later this week from other banks, including Citigroup (C, Fortune 500) and JPMorgan Chase (JPM, Fortune 500).
The stronger-than-expected U.S. data came with some caveats, traders said. Some noted much of the 0.6% gain in retail sales was driven by higher gas prices.
"This points to underlying weakness in the retail space despite the so-called stimulus from the U.S. government," said Jacob Oubina, senior currency strategist at Forex.com in Bedminster, N.J. "The euro remains heavy below $1.40."
The euro was last down 0.2% at $1.3956 while the dollar was flat at ¥92.96. The euro was down 0.2% at ¥129.65.
Lackluster economic data from the 16-country euro zone and its biggest economy, Germany, also tempered hopes for a robust recovery there and limited euro gains.
A monthly poll of economic sentiment from German think tank ZEW defied upbeat market expectations and fell for the first time since October.
"The stabilization of the German economy is underway but it will not be as strong as latest data could make us believe," said Carsten Brzeski, economist at ING Financial Markets.
Elsewhere, slightly higher investor risk appetite lifted the Australian dollar, up 0.7% at $0.7880 , and the pound, up 0.4% at $1.6299. Strong Australian business confidence data and firmer-than-expected reports on UK retail sales and home prices added to demand for both.
Separate United Kingdom data showed inflation below the Bank of England's 2% target in June, while incoming monetary policy committee member Adam Posen said the central bank had not ended its quantitative easing program.
"Economic data still seems like two steps forward and one step back in the march toward a permanent upturn and as such currencies are likely to remain jumpy for quite some time," analysts at Calyon said in a note.
U.S. shares rallied more than 2% on Monday on hopes that U.S. banks' earnings results may outpace expectations.
But while Goldman's earnings did come in better than expected, some traders said expectations had been pumped too high on Monday by an influential analyst's bullish prediction, and that caused a less than enthusiastic reaction in markets.
