Forex News

Dollar rallied, jumping to more than 3-month high of 108.08 vs yen on stronger U.S. retail sales, fresh concerns about CPI from Fed; retail sales +1.0% in May, double economists' expectations, suggesting U.S. economy not falling off cliff; Win Thin, senior FX strategist at Brown Brothers Harriman, said data bolsters odds Fed may hike in coming months to fight inflation, which would be dollar positive. Greenback had already been rising when a French official warned that ECB President Trichet, after a G8 meeting this weekend, might change his mind on plans to possibly hike rates next month. Plus, Philadelphia Fed President Plosser told CNBC there's "no question" Fed will have to hike to keep inflation in check, though he didn't predict when hikes might come.

Late in New York, EUR/USD 1.5420 vs 1.5559 late Wednesday, USD/JPY 107.89 vs 106.88, GBP/USD 1.9472 vs 1.9626, USD/CHF 1.0426 vs 1.0318, EUR/JPY 166.42 vs 166.30. Stocks rose after seesaw session, initially driven up strongly on retail data but continuing fears about Lehman Brothers pushed back buyers; Yahoo fell 10%, while Microsoft rose 4.1%, and Google advanced 1.4%. Lehman fell 4.4%. Dow +0.5%, Nasdaq +0.4%, Philly semicons flat. Treasurys fell sharply, with 2-year yield breaching key 3% level after retail data-surprise; 2-year yield finished +24 bp at 3.05%, 10-year +14.8 bp at 4.22%. Nymex July crude rose 36 cents to $136.74/bbl in late uptick after spending most of day in negative territory. Comex August gold fell $10.90 to $872/oz but off session low of $859.60 as bargain hunting supported toward end of trading

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