US dollar stronger after retail sales decline

The US dollar gained ground Wednesday as investors looked for safe places to put their cash on new data from the Commerce Department showed that US retail sales fell 0.4 percent in April, while the euro weakened on indications that the European Central Bank is likely to widen its program to purchase assets by spending more and buying a wider variety of assets.

Also hurting the shared currency was new numbers from the European Union’s office of statistics which showed that Eurozone production was 20.2 percent lower in March than it was at the same time last year.

At shortly after 11 a.m. in New York the greenback traded at $1.36 to the euro while the Japanese yen traded at ¥130.6882 to the shared currency and at ¥96.095 to the US dollar.

Mexico’s peso was hurt by the reported drop in US retail sales last month as investors backed away from purchases of higher-yielding currencies.

The peso, which traded at 13.3275 pesos to the dollar in late morning trade in New York, has been on the decline since Standard & Poor’s cut Mexico’s credit rating from “stable” to “negative” on Monday.

The pound weakened during the session on the Bank of England’s expectation that the UK’s economy will not begin to expand again until sometime next year and on its stated assumption that inflation will slow to 0.4 percent this year.

In late morning trade in New York, the pound traded at 89.77p to the euro, while it took $1.5149 to buy a pound, taking back some of its earlier losses.

Some believe that losses for the pound could be limited by recent indications that the recession could be nearing an end.

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