LONDON, Sept 12 - The dollar climbed against the euro and steered straight ahead versus the yen on Friday as dealers anticipated upbeat retail sales data later in the session to soothe this week's concerns about the U.S. recovery. Relief that the second anniversary of September 11 had passed without incident in the United States helped the dollar perk up from Thursday's four-week low against the euro, despite news of a worsening U.S. trade gap and another rise in weekly jobless claims. Wariness that Japanese authorities were ready to step in with covert yen-selling intervention kept the dollar on the straight and narrow against the yen.
"The almost perfect stability of dollar/yen means the supposed Bank of Japan actions over the previous few days have gradually paid off," said Peter Wuyts, market strategist at KBC in Brussels. "With stock market sentiment strong on Thursday evening in the U.S. the pressure was somewhat off euro/dollar. If the retail sales are good, then the correction in the dollar could go further." By 1000 GMT the dollar was more than half a percent firmer on the day at $1.1138 per euro and more than a cent firmer than Thursday's four-week low. The dollar held in a 20-tick range of 117.00-20 yen , just over one yen above a 3-1/2-month low set last week. Demand for yen was showing up in the euro instead, which was over half a percent lower on the day at 130.40 yen . In Sweden, the crown pulled back from an earlier 2-1/2 month high against the euro after a poll showed that euro opponents still led euro supporters ahead of Sunday's referendum on joining European economic and monetary union.
DATA AT LAST
U.S. retail sales figures at 1230 GMT are expected to show a fourth consecutive monthly rise in August, with sales plumped up by a car buying spree. Part of the dollar's decline this week has stemmed from a lack of data to counter the impact of a poor August non-farm payrolls report which was released last Friday. "All the data out of the U.S. has been strong except the labour market indicators, so people are looking for a strong retail sales number this afternoon," said Ian Gunner, head of foreign exchange research at Mellon Financial Corporation. Forecasts are for a 1.4 percent rise in August retail sales compared with 1.4 percent in July. Excluding automobiles, sales are seen up 0.8 percent, the same rate as July.
Producer prices data is also due at 1230 GMT while the preliminary reading of the University of Michigan consumer sentiment survey, due at 1345 GMT, is forecast to show a rise to 90.0 in September from 89.3 in August. In Europe, finance ministers meeting in Stresa, in Italy, are set to debate budget problems faced by some of the euro zone's largest economies, with France and Germany set to break rules of deficit limits this year and next.
JAPANESE MOVES
The Bank of Japan left its monetary policy unchanged after a two-day meeting, as widely expected. But it moved to address concerns over rising long-term interest rates, with plans to study extending the maturities of securities it buys in repurchase operations. Japanese shares rose strongly on Friday, with the benchmark Nikkei average <.N225> up over 1.5 percent, but demand for yen was mitigated by market awareness that Japan does not want its currency to rise and damage export competitiveness. "People are cautious about intervention, and there probably has been intervention all week," said Kosuke Hanao, head of foreign exchange sales at Royal Bank of Scotland in Tokyo. "Having said that, demand for Japanese stocks and the yen is strong and that is keeping the dollar's rebound very limited."
Global investors have had more reasons to be bullish on Tokyo stocks after Japan revised its second quarter growth figures upward this week, saying its economy was growing at an annualised rate of 3.9 percent -- exceeding U.S. growth of 3.1 percent in the same quarter. Japanese authorities insisted, however, that the yen should not strengthen despite the improving economic outlook. "There are now brighter signs on Japan's economic outlook, but there are still uncertainties and the U.S. economy is firm," Vice Finance Minister for International Affairs Zembei Mizoguchi told reporters. "So it's not a situation which warrants a further rise in the yen."//