By Deborah Levine and Barbara Kollmeyer, MarketWatch
NEW YORK (MarketWatch) — The dollar fell further against the euro and lost ground against other major currencies Friday after a U.S. government report showed the nation’s retail sales rose 0.5% in July.
The data had the effect of relieving some fears about what might happen with growth in the largest global economy while reinforcing gains on Wall Street for stock futures to cap off what’s been a turbulent week for financial markets.
The euro EURUSD +0.17% rose to $1.4271, up from $1.4256 before the report and $1.4226 in late North American trading Thursday.
The dollar index DXY -0.15% , which measures the performance of the greenback against a basket of six major currencies, fell further, down to 74.445 from 74.618 late Thursday.
The rise in U.S. retail sales for July was roughly in line with analysts’ expectations, but some noted the data are for a period before the debt-ceiling debate in Washington really sent stocks and confidence down. See story on retail sales.
“To begin, the upside surprise in core retail sales was not driven by a grab for shotguns, baked beans, and water. It is not the end of the world,” said Eric Green,chief market economist at TD Securities. The data point “improves the hand off to third-quarter GDP and while it is exceptionally modest, we take what we can.”
A more current indicator — the Thomson Reuters and University of Michigan’s August index of consumer sentiment — is due at 9:55 a.m. Eastern time.
U.S. stock futures extended gains after the report as well. Read more on U.S. stock futures.
The euro also gained along with regional equity benchmarks after a ban on short selling of financial stocks in four European countries, shrugging off some weak economic data. Read more on short-selling ban in Europe.
“Today’s European equity rally in our view is driven primarily by the short-selling ban rather than by fundamentals and masks the disappointing data reports released in Europe,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman. “The euro has largely ignored soft production data and weak French GDP numbers.”
Safe havens
Against the traditional safe havens of the Japanese yen and Swiss franc, the dollar traded mixed.
The greenback USDJPY -0.25% fell slightly against the yen, to ¥76.64 compared to ¥76.79 Thursday.
Against the Swiss franc, the dollar USDCHF +1.38% continued to climb, trading at 77.19 centimes compared to 76.30 centimes late in prior session. There are 100 centimes in a franc.
The euro also rose, up another 1.7% on the swissie. Both the dollar and euro soared against the franc on Thursday, amid more signs that the Swiss National Bank will make good on threats to take steps to halt the franc’s strength. Read more about Swiss franc.
Friday’s weakness in the franc reflects “damage ... done by chatter of taxes on deposits,” said Elsa Lignos, senior currency strategist at RBC Capital Markets, wrote in a note.
“But unless there is concrete action, or a good turnaround in risk appetite, we still see it hard to see this lasting” Lignos wrote in a note. “Unilateral taxes on deposits may push deposits elsewhere. Multilateral taxes are hard to impose on non-resident banks.”
Deborah Levine is a MarketWatch reporter, based in New York.
Barbara Kollmeyer is an editor for MarketWatch in Madrid.
