The US currency has spent much of this year defying predictions that it would continue to fall because of the country's budget and current account deficits, and the retail sales figures for April, which showed a leap of 1.4% on the month, gave additional support.
That was taken by markets as an indication that the US economy might not be slowing after all and pushed the dollar up to 1.27 to the euro.
"On the basis of the latest data, it is hard to discern very much of the fabled 'soft patch' in the retail data," said Simon Rubinsohn, of Gerrard Ltd. "Moreover, with the gasoline price beginning to edge downwards, the drop in consumer confidence should begin to reverse."The sales data followed surprisingly strong jobs data last week and suggested it may be premature to announce the end of the US economic recovery. The Federal Reserve, the US central bank, was likely to continue raising interest rates for some time to come, analysts said. The Fed raised US rates to 3% last week.
There was also some good news from the eurozone economy as Eurostat reported an increase in the gross domestic product of the 12-nation bloc of 0.5% in the first quarter of the year compared with the previous three months. The German economy grew 1% in the period, its best performance since early 2001, but the Italian economy shrank by 0.5%.
Economists cautioned, however, that the German performance was mainly down to a tax cut in January that temporarily boosted retail sales in the month. Otherwise, they warned, the eurozone economy was showing few signs of life. The German performance was almost certainly a one-off that would not be repeated in the coming quarters.
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