NEW YORK: The dollar fell to a one-month low against the yen on Monday after poor June US retail sales data bolstered speculation the Federal Reserve may launch another round of quantitative easing to boost a slowing economy.
The euro was also on the defensive against most currencies, hitting a 3-1/2-year low against sterling and a six-week trough versus the yen as investors fretted about the delay in mobilizing bailout funds for troubled euro zone states.
The common currency did reverse early losses against the dollar in the aftermath of the weak US retail sales number, but investors cautioned it was not the start of a strong uptrend.
Instead, investors have temporarily shifted their focus to the US economy from euro zone debt concerns after Monday�s weak US numbers and ahead of testimony by Fed Chairman Ben Bernanke on monetary policy this week.
US retail sales fell 0.5 percent last month, though economists had expected a gain of 0.2 percent. Ex-autos, sales dropped 0.4 percent.
�I think people have started to re-price more easing coming through from the Fed after the retail sales data,� said Brian Kim, currency strategist at RBS Securities in Stamford, Connecticut.
In late afternoon New York trading, the dollar slid 0.4 percent against the yen to 78.82 yen, adding to losses after the soft US retail sales data. The greenback fell as low as 78.67 yen, its weakest level since mid-June.
Investors could sell the dollar more if Bernanke hints in testimony to Congress on Tuesday and Wednesday at the possibility of more quantitative easing to boost the US economy.
The Fed last month expanded efforts to keep long-term interest rates low by saying it would buy an additional $267 billion in long-dated bonds while selling short-term securities. But it held off from a third round of outright bond purchases.
Hedge fund manager Stephen Jen at SLJ Macro Partners in London said he does not believe US economic numbers are weak enough to justify further quantitative easing from the Fed.
But he added that �the Fed could try to convey their easing bias by extending their commitment of low rates until mid-2015.�
In late afternoon New York trade, the euro rose 0.2 percent against the dollar to $1.2277, with a peak of $1.2290. It earlier fell as low as $1.2173, not far from a two-year low hit last week.
The euro also slid against sterling, to its lowest since late 2008, but was last at 78.50 pence, down 0.1 percent. The euro also dropped to 96.14 yen, its lowest since June 1, but last traded at 96.79 yen, down 0.2 percent.
The single currency hit a record low against the Canadian dollar.
�The euro�s losses were mainly a result of the uncertainty surrounding the (euro zone) bailout fund due to court issues. The implementation of that fund just keeps getting pushed back,� said Greg Moore, currency strategist at TD Securities in Toronto.
Germany�s Constitutional Court said on Monday it would not rule until Sept. 12 on whether the euro zone�s bailout fund � the European Stability Mechanism � and planned changes to the region�s budget rules are compatible with German law.�Reuters
The euro was also on the defensive against most currencies, hitting a 3-1/2-year low against sterling and a six-week trough versus the yen as investors fretted about the delay in mobilizing bailout funds for troubled euro zone states.
The common currency did reverse early losses against the dollar in the aftermath of the weak US retail sales number, but investors cautioned it was not the start of a strong uptrend.
Instead, investors have temporarily shifted their focus to the US economy from euro zone debt concerns after Monday�s weak US numbers and ahead of testimony by Fed Chairman Ben Bernanke on monetary policy this week.
US retail sales fell 0.5 percent last month, though economists had expected a gain of 0.2 percent. Ex-autos, sales dropped 0.4 percent.
�I think people have started to re-price more easing coming through from the Fed after the retail sales data,� said Brian Kim, currency strategist at RBS Securities in Stamford, Connecticut.
In late afternoon New York trading, the dollar slid 0.4 percent against the yen to 78.82 yen, adding to losses after the soft US retail sales data. The greenback fell as low as 78.67 yen, its weakest level since mid-June.
Investors could sell the dollar more if Bernanke hints in testimony to Congress on Tuesday and Wednesday at the possibility of more quantitative easing to boost the US economy.
The Fed last month expanded efforts to keep long-term interest rates low by saying it would buy an additional $267 billion in long-dated bonds while selling short-term securities. But it held off from a third round of outright bond purchases.
Hedge fund manager Stephen Jen at SLJ Macro Partners in London said he does not believe US economic numbers are weak enough to justify further quantitative easing from the Fed.
But he added that �the Fed could try to convey their easing bias by extending their commitment of low rates until mid-2015.�
In late afternoon New York trade, the euro rose 0.2 percent against the dollar to $1.2277, with a peak of $1.2290. It earlier fell as low as $1.2173, not far from a two-year low hit last week.
The euro also slid against sterling, to its lowest since late 2008, but was last at 78.50 pence, down 0.1 percent. The euro also dropped to 96.14 yen, its lowest since June 1, but last traded at 96.79 yen, down 0.2 percent.
The single currency hit a record low against the Canadian dollar.
�The euro�s losses were mainly a result of the uncertainty surrounding the (euro zone) bailout fund due to court issues. The implementation of that fund just keeps getting pushed back,� said Greg Moore, currency strategist at TD Securities in Toronto.
Germany�s Constitutional Court said on Monday it would not rule until Sept. 12 on whether the euro zone�s bailout fund � the European Stability Mechanism � and planned changes to the region�s budget rules are compatible with German law.�Reuters
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