WASHINGTON (dpa-AFX) - The U.S. dollar lost ground against most of its major counterparts on Tuesday, weighed down by data showing a smaller than expected increase in the retail sales in the month of May.
The data helped raise hopes the Federal Reserve will cut interest rate this year.
Data from the Commerce Department showed retail sales crept up by 0.1% in May after dipping by a revised 0.2% in April. Economists had expected retail sales to rise by 0.2% compared to the unchanged reading originally reported for the previous month.
Excluding an increase in sales by motor vehicle and parts dealers, retail sales edged down by 0.1% in May after slipping by a revised 0.1% in April. Economists had expected ex-auto sales to climb by 0.2%, matching the increase originally reported for the previous month.
'Retail sales came in really light this morning and while that may be good news for inflation hawks, it could be the beginning of a slowdown in growth, which would hurt a lot more than a couple of interest rate cuts would help,' said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.
A report from the Federal Reserve showed industrial production increased by much more than expected in the month of May, jumping by 0.9% in the month, after coming in unchanged in April. Economists had expected industrial production to rise by 0.3%.
The dollar index, which firmed to 105.56 in the European session, dropped to 105.13 in the U.S. session before recovering to 105.28, still down marginally from the previous close.
Against the Euro, the dollar was down slightly at 1.0739, and against Pound Sterling declined slightly to 1.2709.
The dollar gained marginally against the Japanese currency, fetching 157.84 yen a unit. The dollar slipped to 0.6657 against the Aussie. The Reserve Bank of Australia maintained its interest rates at a 12-year high for a fifth straight meeting, on Tuesday.
The policy board of the RBA, led by Governor Michele Bullock, decided to hold the cash rate target at 4.35%.
The Swiss franc firmed to 0.8842 against the dollar, gaining from 0.8894, and the Loonie edged up slightly against the greenback, at 1.3719.
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