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FOREX-Dollar gains against euro after ECB comments, retail sales data
April 14, 2014 / 2:40 PM / 3 years ago

FOREX-Dollar gains against euro after ECB comments, retail sales data

(Adds new prices, analyst comment)

* Euro dips after ECB flags easing option

* Comments by Draghi, others seen capping any euro gain for now

* U.S. retail sales up 1.1 percent in March

* Dollar up against ruble on geopolitical tensions

By Sam Forgione

NEW YORK, April 14 (Reuters) - The dollar rose against the euro on Monday after European Central Bank President Mario Draghi signaled the bank would ease monetary policy further, while strong U.S. retail sales data also boosted the dollar against the yen.

Draghi said in Washington on Saturday that “a further strengthening of the exchange rate would require further stimulus”. Bank of France chief Christian Noyer hammered home the message saying: “The stronger the euro is, the more accommodative policy is needed.”

“(The ECB) is taking the value of the euro more seriously in their approach to monetary policy,” said Thierry Albert Wizman, global interest rates and currencies strategist at Macquarie Ltd in New York.

The statements marked the ECB’s strongest signal yet that it would act to head off further gains in the euro. Traders have watched closely for signs of additional stimulus measures from the ECB to prevent deflation.

ECB policymakers ramped up talks of more monetary easing on March 25, but comments from the central bank’s policymakers last Monday curbed some expectations by suggesting more stimulus was not imminent.

The euro retreated around half a percent from close to 2014 highs against the dollar, but was still up from its low for the year of $1.3476, which it touched on Feb. 3. Wizman of Macquarie said, despite Draghi’s latest comments, skepticism that the ECB would act suddenly kept the currency from falling further.

The dollar hit session highs against the euro, Japanese yen, and Swiss franc after the Commerce Department said retail sales increased 1.1 percent in March, marking the biggest gain in 1-1/2 years as receipts rose in nearly all categories.

The strong data detracted from the yen’s safe-haven appeal. The euro was last down 0.43 percent against the dollar at $1.3823. The dollar was last up 0.05 percent against the yen at 101.69, and was up 0.3 percent against the Swiss franc to trade at 0.8786 francs.

The U.S. dollar index, which measures the dollar against six major currencies, was last up 0.32 percent.

The retail sales data helped support the dollar’s gains, although it had a limited impact after last week’s release of minutes from the Federal Reserve’s latest policy meeting, which suggested the central bank would remain dovish, said Brian Dangerfield, currency strategist at RBS Securities in Stamford, Connecticut.

The dollar also advanced nearly 1 percent against the Russian rouble on escalating geopolitical tensions surrounding Russia and Ukraine. Pro-Russian separatists on Monday ignored an ultimatum to leave occupied government buildings in eastern Ukraine while another group of rebels attacked a police headquarters.

The dollar was last up 0.83 percent against the ruble to trade at 35.92 rubles.

“It’s clear that geopolitical tension is returning to the focus after a relative period of calm,” said Dangerfield of RBS. (Additional reporting by Patrick Graham in London; Editing by Tom Brown)

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