USD, yen gain on euro

The US dollar and the Japanese yen both gained on the euro Wednesday, ahead of the European Central Bank’s decision on interest rates, due Thursday, in which the Bank is expected to cut rates by around half a percentage point.

The gains for the greenback and the yen came as the US Commerce Department reported that retail sales in the United States dropped by 2.7 percent in December.

It was much more of a decline than had been forecast and the sixth consecutive month of declines for US sales.

The drop in sales indicated that there is more recession to come before the economy begins to recover, making the dollar and the yen look like safe places to invest.

In late morning trade in New York the dollar traded at $1.3151 to the euro while it took ¥116.8267 to buy a euro and the yen traded at ¥88.835 to the dollar.

At the same time, the Mexican peso weakened against both the US dollar and the yen in a general flight from risk.

The decline in US retail sales raised concerns that US demand for Mexican products will decline further.

The possibility that Banco de Mexico will cut interest rates at its 16 January meeting also hurt the peso.

At around 11:30 a.m. in New York, the peso traded at 14.0965 to the US dollar while it took ¥6.3147 to buy a peso.

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