Euro up against dollar as U.S. retail sales slow

The euro traded higher against the dollar on Wednesday as U.S. data showed that retail sales had slowed in January.

Photo: Euro up against dollar as U.S. retail sales slow

The 13-nation euro bought US$1.3094 in afternoon European trading, up from US$1.3031 in New York late Tuesday. The British pound rose to US$1.9564 from US$1.9459.

The dollar was a little lower against the Japanese currency, slipping to 121.08 yen from 121.22 yen.

The U.S. Commerce Department reported Wednesday that retail sales essentially were flat in January, the weakest performance in three months, hurt by a big drop in auto purchases. Analysts had expected a gain of 0.3 percent.

"This report makes further Federal Reserve interest rate hikes less likely and should be good for stock prices," said Peter Morici, a professor at the University of Maryland School of Business.

The prospect of flat or falling interest rates is, however, liable to depress the dollar, reports AP.

Higher interest rates, a weapon against inflation, support a currency by making some assets denominated in that currency more attractive to investors.

Markets also were awaiting testimony to Congress from Federal Reserve Chairman Ben Bernanke for pointers on the bank's future interest rate course.

The Fed has held rates steady over recent months after a long series of increases, while the European Central Bank has raised its rates.