* Talk of Obama choosing Summers for Fed helps lift dollar
* Markets focused on next week's Fed meeting
* U.S. retail sales and other data disappoints
NEW YORK, Sept 13 The dollar recovered to trade
higher against the euro on Friday as investors adjusted
positions ahead of the weekend and next week's Federal Reserve
policy setting meeting.
After last Friday's weaker-than-expected U.S. non-farm
payrolls data, many traders and analysts expect the central bank
to announce a modest $10 billion reduction to its $85 billion
monthly bond-buying program.
Trading was volatile, however, with disappoinging U.S. data
and talk that former Treasury Secretary Larry Summers was about
to be named as the next chairman of the Fed, buffeting the
dollar during the New York session.
"Despite all the disappointing data the dollar is still
supported," said David Song, currency analyst at DailyFX in New
York. "Lots of market participants are turning a blind eye to
the data and positioning for $10 billion in asset purchases next
The dollar was last at 81.593, up 0.1 percent from the
previous close of 81.507, and well off the two-week low
of 81.356 set on Thursday.
The euro was down 0.1 percent at $1.3278.
Earlier trading in thin volume was influenced by a report
from Japanese business daily Nikkei saying the White House was
expected to announce the Fed Chairman decision after the Fed's
Sept. 17-18 meeting.
Summers is seen as less dovish than Janet Yellen, the other
leading candidate to replace Ben Bernanke, whose term ends next
Although some traders doubted the report, it gave the dollar
and U.S. Treasury yields an added lift. The White House said
U.S. President Barack Obama had yet to make a decision on the
"The dollar will appreciate in the medium term irrespective
of whether its Summers or Yellen," said Ken Dickson, investment
director of currencies at Standard Life Investments in Edinburgh
with $271.2 billion in assets under management. "It's fair to
say the market believe Summers will be more dollar positive."
As the New York session opened, the dollar had struggled
after U.S. retail sales rose less than expected in August in the
latest sign that economic growth slowed in the third quarter.
Retail sales increased 0.2 percent last month as Americans
bought automobiles, furniture, electronics and appliances, the
Commerce Department said on Friday. Analysts had been expecting
a 0.4 percent rise for the month.
A separate report showed consumer sentinment fell in
September. The Thomson Reuters/University of Michigan
preliminary reading on the overall index of consumer sentiment
fell to 76.8 from the final August figure of
The reports are some of the last before the Fed meets next
week, when more clarity on its "tapering" plans is expected.
"It's a little piece of data that says maybe we are not
ready to start slowing (asset) purchases and that's bad for the
dollar," said Andrew Dilz, foreign currency trader at Tempus Inc
in Washington of the retail sales report.
The Labor Department reported U.S. producer prices rose in
August as energy costs rebounded, but underlying inflation
The dollar was last down 0.3 percent at 99.29 yen,
off an intraday high of 99.97 yen hit after the Nikkei report.
Earlier, the dollar rose against the yen after the
government raised its view on the economy for the seventh time
this year because of rising capital expenditure.
"In my view, anything that seems to edge away from deflation
pressures is more negative for the yen," said Mitul Kotecha,
head of global foreign exchange strategy for Credit Agricole in
Analysts said although the dollar has recently struggled to
stay above 100 yen, the uptrend was still intact.