The U.S. Dollar weakened the most in one month against the Yen and erased prior day gains versus the Euro following reports indicating a surprising decline in U.S. Retail Sales. According to the Commerce Department, Retail Sales fell for a third consecutive month, thereby increasing the possibility the Federal Reserve may take additional steps to fuel economic growth.
The shared currency continued to drop against the Yen as inflation in the Euro-zone posted at 2.4 percent, which is the same as it was in the month of May. Early in the trading session, the Euro exchange rate dipped below $1.2200 as the German Chancellor, Angela Merkel, stated that she hasn’t changed her mind or “softened her stance” on the measures needed to stem the E.U. debt crisis. Furthermore, the International Monetary Fund lowered its global growth outlook for the coming year and stated that the European debt crisis is the reason for Spain’s recession. Also, the economic slowdown in China and India played an important factor. The IMF indicated that global economies will only grow 3.9 percent in 2013 depending on whether sufficient policy action is taken in order to allow for conditions in the Euro-zone to ease up.
Other money market reports showed that the Canadian Dollar weakened against most of its counterparts after the U.S. released unexpected Retail Sales figures. The Loonie remained under pressure as its 10-year bond yields hit record lows.
Finally, the British Pound strengthened against the U.S. Dollar following the release of lackluster Retail Sales data.