NEW YORK (AFP) - The US dollar fell broadly Wednesday after a poor US retail sales report while the euro gained a strong leg up from signs of an improving eurozone economy.
The closely watched US retail sales report showed consumption fell flat at the start of the second quarter, the latest sign of weakness in the world's largest economy that some analysts say will give the Federal Reserve pause in its plan to raise near-zero interest rates this year.
Retail sales stagnated in April after rising 1.1 per cent in March, missing analyst estimates of a 0.2 percent rise. Year-over-year, retail sales rose 0.9 per cent, the weakest growth since 2009 when the economy exited the Great Recession.
"First-quarter consumer spending is off to a very weak start and that has led to a decline in the dollar, drop in Treasury yields and reduced expectations for Q2 GDP growth," said Kathy Lien of BK Asset Management in a research note.
"We never believed that the Fed would raise interest rates in June and we are still looking for tightening in September but until we see a consistent improvement in US data, the dollar may have a hard time finding buyers," she said.
The euro, meanwhile, advanced after official data showed economic growth in the 19-nation eurozone strengthened to 0.4 per cent quarter-over-quarter in the first quarter, from 0.3 per cent in the final three months of 2014.
Some of that momentum came after the European Central Bank launched a massive bond-buying program in March to fight tepid growth and deflationary risks in the single-currency bloc.
The eurozone has "benefited from sharply lower oil prices, a weakened euro and increasing ECB stimulus," said Howard Archer, chief European economist at IHS Global Insight.