The dollar resumed previous session's downtrend in early New York deals Wednesday after data showed that the U.S. retail sales decreased modestly and the producer prices fell larger than expected in May.
Retail sales in the U.S. showed a modest decrease in the month of May, according to a report released by the Commerce Department today, with the report also showing a notable downward revision to the sales data for April.
The Commerce Department said retail sales edged down by 0.2 percent in May, matching the revised decrease seen in April. Economists had expected sales to dip by 0.2 percent compared to the 0.1 percent increase originally reported for the previous month.
Excluding a 0.8 percent increase in sales by motor vehicle and parts dealers, retail sales fell by 0.4 percent in May compared to a 0.3 percent decrease in April. Economists had expected ex-auto sales to come in roughly flat.
Steep drop in energy prices at the producer level fueled a larger than expected drop in overall producer prices for May, according to figures released by the Labor Department.
The producer price index for finished goods fell a full 1 percent in May, marking the largest drop since July 2009. Most economists had predicted a fairly large drop in the PPI following April's 0.2 percent decline, but most had expected producer prices to fall by 0.6 percent.
On an annualized basis, producer prices remain up 0.7 percent over May 2011 levels despite two consecutive monthly declines.
So called, "core" producer prices, which exclude the somewhat volatile food and energy sector, rose by 0.2 percent for May, the third consecutive monthly increase in a row.
The dollar lost ground following the data, extending previously hit 2-day lows against the euro to 1.2562 and the Swiss franc at 0.9563. On the downside, the greenback may find target levels at 1.2620 against the common currency and 0.9550 versus the alpine unit.
The single currency has been rising after a report showed that the euro zone industrial production declined in April at a slower than expected pace. Industrial production logged a monthly fall of 0.8 percent in April after easing 0.1 percent in March. The decline was smaller than economists' expectations for a 1.2 percent drop.
Meanwhile, Germany's harmonized consumer prices rose more than initially estimated in May, final data from the Federal Statistical Office revealed. EU harmonized inflation came in at 2.2 percent in May, revised up from the prior estimate of 2.1 percent. The rate was thus unchanged from the 2.2 percent seen in April.
Swiss producer and import prices declined more than expected by economists in May, the Federal Statistical Office said today. Year-on-year, the producer and import price index fell 2.3 percent in May, faster than economists' forecast for a 2 percent decline. Compared to the previous month, the index fell 0.2 percent, while expectations were for a 0.1 percent drop.
The dollar also shed almost 30-pips to reach a low of 1.5565 against the pound around 8:35 am ET. Against the yen, the greenback depreciated almost 0.4 percent to a low of 79.76 from a 5-day high of 79.75 hit in early trading.
Core machine orders in Japan climbed a seasonally adjusted 5.7 percent on month in April to a value of 788.6 billion yen. That headline figure blew away forecasts for an increase of 1.6 percent following the 2.8 percent contraction in March and the 2.8 percent gain in February. Core machine orders rose for the fourth time in five months.
Looking ahead, the Commerce Department's business inventories report for April due at 10:00 am ET is expected to show a 0.3 percent increase in business inventories for the month.
by RTT Staff Writer
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