Dollar’s Decline Renewed
Jun 12th, 2009 | By Doug Casey | Category: US Dollar & Forex TradingIn the currency market, the dollar slumped against the euro. Late Thursday, the euro was trading at $1.417 vs. $1.3984 on Tuesday.
“The U.S. dollar underperformed all the major currencies overnight as risk seeking weighed on the low-yielding greenback,” said T.J. Marta, founder and chief strategist at Marta on the Markets.
The day’s numbers helped support the risk takers.
The Commerce Department said that sales at U.S. retail stores increased 0.5% in May. Sales were up for only the fourth time in the past year, and the first time since February. Compared with May 2008, though, sales were still down 9.6%, and comparing the first five months of 2009 with the same 2008 period, sales are down 10.2%. The May figure was also below economists’ projections for a 0.7% increase.
That led Brian Bethune, chief U.S. financial economist for IHS Global Insight Overall, to comment that “the state of retail sales remains weak … Real consumer spending is still on track to decline slightly in the second quarter.”
And until the labor market can create jobs (and not just lose them at a slower pace), “discretionary spending will remain weak and there will be little upside potential for consumer spending,” wrote Richard Moody, of Forward Capital.
Meanwhile, the Labor Department said that the number of initial jobless claims fell 24,000 to 601,000 in the week ended June 6, better than economists’ expectations for an initial claims level of 620,000. More disconcerting was that, in the week ended May 30, continuing claims for benefits reached a new record high, rising 59,000 to 6.82 million from an upwardly revised level in the prior week.
“On balance, the decline in initial claims is supportive of the argument that job destruction is beginning to slow within the U.S. labor market,” wrote Ian Pollick, economics strategist with TD Securities. “On the flip side though, the gallop in continuing claims as well as the increase in the four-week moving average for the continuing claims component suggests that the duration of unemployment continues to hover at record lengths, as the pace of job creation has come to a virtual stand-still.”
Source: Dollar’s Decline Renewed
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