The dollar weakened against its peers today following the release of discouraging retail sales data which renewed doubt as to when the Federal Reserve will increase interest rates due to worry surrounding the level of economic recovery. The US Commerce Department reported that US retail sales increased 0.9% in March compounding forecasts for an increase of 1.0%. Retail sales dropped 0.5% in February. Producer prices rose by 0.2% in March matching forecasts following a 0.5% decline in February.

The euro strengthened against the dollar with the pair surging roughly 1.2% to over its 1.07 handle coming off a low of 1.0532 set earlier in the session. The euro was supported by the International Monetary Fund having increased its growth outlook for the euro zone this year to 1.5% from 1.2%. The IMF’s view is that cheaper oil prices and a weaker euro will help generate growth. Other figures revealed that industrial production out of the euro zone rose 1.1% in February well beyond expectations for a 0.4% increase following a decrease of 0.3% in January.

The pound strengthened also regaining lost ground against the dollar reaching its 1.48 handle following the release of data which revealed that the annual rate of UK consumer inflation stayed at its historically low level of zero in March matching forecasts following the same reading in February. Core inflation wound down to nearly its lowest level in 9 years from 1.2% in February to 1.0% in March while experts had forecast no change.

The yen strengthened against the dollar following a dollar selloff on the back of weak US retail sales and producer prices data. Negative outlook resulting from US stocks moving lower put further pressure on the pair to the downside which remains bound to its tight range. Japan is due to release industrial production data tomorrow.

The Australian, New Zealand and Canadian dollars strengthened against the greenback. The Aussie dollar was up over 0.7% while the kiwi dollar and the loonie were up over 1.2%. The Aussie dollar had been supported earlier in the session following the release of NAB’s highly anticipated survey which highlighted a surge in business confidence and an improvement in business conditions. The kiwi dollar posted gains despite the release of data which revealed a decline in New Zealand business confidence. Weak US retail sales and producer prices data helped the loonie edge out the greenback.

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