NEW YORK (AP) — The dollar rose Thursday against the euro but dropped against the pound and yen as the European Central Bank held rates steady and its president forecast an “uneven” European recovery.
U.S. retail sales unexpectedly fell in December and new claims for jobless benefits rose more than expected last week.
The 16-nation euro fell to $1.4480 in morning trading Thursday in New York from $1.4512 late Wednesday.
The British pound rose to $1.6300 from $1.6279, and the dollar fell to 91.28 Japanese yen from 91.45 yen.
The ECB left rates untouched at 1 percent at its monthly interest-rate meeting, as economists had expected. Jean-Claude Trichet, the head of the central bank, dismissed speculation that beleaguered Greece could leave the eurozone block. Greece is dealing with huge budget deficits and has come under pressure to improve its public finances amid downgrades from credit ratings agencies. Trichet also said Europe’s economic rebound “is likely to remain uneven” and hinted that the ECB would not be hiking rates in the near future.
The Federal Reserve has also indicated that continuing high unemployment and slack in the economy, along with subdued inflation, would allow it to leave interest rates at the current range near zero for a long time.
Low rates can weigh on a currency because they mean smaller returns on assets denominated in that currency. High rates, or the expectation of increasing rates, can bolster a currency as investors transfer funds in search of higher yields.
Meanwhile, in the U.S., the government said retail sales fell 0.3 percent in December — economists had expected an increase. It was the first drop since September and struck a note of warning to those who had hoped for a comeback in consumption. The government also said that newly laid-off workers filing for unemployment aid rose by 11,000 to a seasonally adjusted 444,000 last week, more than had been predicted.
The low-yielding, safe-haven dollar has tended to benefit, usually alongside Treasury prices, from worse-than-expected economic news since the fall of Lehman Brothers. Data indicative of an economic rebound often weighs on the dollar as traders opt for riskier bets — on stocks, emerging-market currencies and commodities.
In other morning trading Thursday, the dollar rose to 1.0213 Swiss francs from 1.0185 francs, but fell to 1.0277 Canadian dollars from 1.0306 late Wednesday.
The dollar also dropped versus the New Zealand and Australian dollars, but rose against the Brazilian real and edged up on the Scandinavian currencies.