US Dollar gains on solid US retail sales data

March 14, 2013 | 14:47

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The US dollar rebounded Wednesday after losing against the euro for two days, as strong US retail sales data highlighted the continuing divergence between the American and European economies.

The euro fell to US$1.2962 at 2200 GMT -- compared to US$1.3035 late Tuesday -- after the US Commerce Department released data showing retail sales gaining 1.1 per cent in February over the month before, despite an increase in payroll taxes that hit paychecks in January.

Stripping out often volatile autos, gasoline and building materials, core sales were up a solid 0.4 per cent.

"The data are consistent with total real consumption rising at around a 2.8 per cent annual rate so far" in the first quarter, said Jim O'Sullivan, US economist at High Frequency Economics.

"That is an impressive performance given the hit to spending power from the payroll tax hike."

The yen slipped as politicians in Tokyo debated the strongly pro-stimulus team nominated to lead the Bank of Japan.

According to reports, Japan's largest opposition party said it would not back the nomination of Kikuo Iwata to serve as the Bank of Japan's deputy governor.

Iwata, along with the nominee for governor Haruhiko Kuroda, is a strong supporter of giving more control of the BoJ to the government, and is also an advocate of further aggressive monetary easing.

The US dollar gained to 96.14 yen from 96.05 yen late Tuesday, while the euro rose to 1.2453 yen from 1.2344.

The British pound edged higher to US$1.4922 from US$1.4903, while the US dollar rose to 0.9525 Swiss francs from 0.9468 francs.