Dollar Surges on Strong Retail Sales

LONDON, April 13 (AFP) - The dollar gained against other major currencies in the wake of the publication of strong US retail sales suggesting the world's biggest economy is in rude health.

The single European currency fell to 1.1927 dollars compared to 1.2072 late Monday in New York.

The dollar was changing hands at 106.92 yen from 105.33 on Monday.

The euro fell to as low as 1.1906 dollars -- its lowest level since the end of November -- after the better-than-expected data were released

"The dollar surged across the board as stronger retail sales prompted upward revisions to US economic growth and corporate earnings," said Michael Woolfolk, strategist at Bank of New York.

US retail sales rose 1.8 percent in March, the fastest pace in a year, confounding predictions of a 0.7 percent increase. The previous month's figures were also revised up significantly, with February sales now said to have risen 1.0 percent compare with an earlier 0.6 percent estimate.

Analysts said the statistics added to arguments in favour of a US interest rate hike, especially after recent data signalled an improving US labour market.

"The data was well above expectations and was backed up by upward revisions to previous months, fuelling speculation of a near term US rate hike, pushing the dollar up," said Kamal Sharma, analyst at Dresdner Bank.

US consumer spending is an extremely important indicator because it accounts for two-thirds of US economic activity.

Analysts said there was potential for the dollar to rise further, with more key releases scheduled this week including the March consumer price index and confidence surveys from the Philadelphia branch of the Federal Reserve and the University of Michigan.

At the same time, first quarter earnings news from the likes of Intel, Citigroup, Bank of America and IBM would also be eagerly awaited.

However, the going may not be all smooth for the dollar, with the continued level of violence in Iraq putting intermittent pressure on the US currency, analysts said.

The euro was changing hands at 1.1927 dollars from 1.2072 late on Monday in New York, 127.50 yen (127.15), 0.6567 pounds (0.6564) and 1.5534 Swiss francs (1.5486).

The dollar stood at 106.92 yen (105.33) and 1.3031 Swiss francs (1.2822).

The pound was at 1.8167 dollars (1.8393), 194.26 yen (193.68) and 2.3666 Swiss francs (2.3582).

On the London Bullion Market, the price of an ounce of gold stood at 407.90 dollars against 419.50 dollars late on Monday.

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Forex-Europe

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