February 12, 2015 / 12:16 AM / 3 years ago

Dollar tumbles on weak U.S. data; euro hits one-week high

NEW YORK (Reuters) - The dollar dropped across the board on Thursday after weaker-than-expected U.S. economic data, although its outlook remained upbeat as many investors continued to price in an interest rate hike by the Federal Reserve sometime this year.

A picture illustration of U.S. dollar, Swiss Franc, British pound and Euro bank notes, taken in Warsaw January 26, 2011. Picture taken January 26. REUTERS/Kacper Pempel

The dollar index, a gauge of its value against six major currencies, fell after two straight days of gains. For the month of February, the dollar index was down 0.5 percent, on track for its first monthly loss in eight months.

U.S. retail sales fell 0.8 percent last month, while jobless claims rose above 300,000 in the latest week.

“We’re seeing a bit of a bump in the road for the dollar with retail sales being a miss compared with expectations and jobless claims being higher,” said Lennon Sweeting, corporate dealer at U.S. Forex in Toronto.

“But the U.S. dollar is still favored to have a bullish trend at the moment, especially when so many central banks right now are cutting rates.”

In late New York trading, the dollar index was down 0.9 percent at 94.153 .DXY. posting its largest one-day loss in more than a week.

The dollar fell 1.3 percent against the yen to 118.88 JPY=.

A teller counts euro banknotes inside a National Bank of Greece branch in Athens February 10, 2010. REUTERS/John Kolesidis

The euro, meanwhile, rose to one-week highs versus the dollar and was last up 0.6 percent at $1.1399 EUR=.

“Even with the soft U.S. numbers, euro/dollar is struggling to hold on to their highs,” said Shaun Osborne, chief currency strategist at TD Securities in Toronto.

“I don’t expect the euro to do that much better. The stabilization we have seen is really just a result of being oversold longer term.”

The euro got a little bit of a break after the European Central Bank further raised the cap on emergency funding for Greek banks by about 5 billion euros to 65 billion euros. However, the fate of Greece’s international bailout deal still remains uncertain.

Greece’s new leftist Prime Minister Alexis Tsipras told EU leaders that the austerity plan is killing his economy and they must find an alternative.

The Swedish crown, meanwhile, fell to its weakest level since April 2009 against the dollar, which was last up 0.6 percent at 8.4340 crowns SEK=, after the country's central bank on Thursday cut its key repo rate into negative territory.

Against the euro, the crown was down 1.2 percent EURSEK=, with the single euro zone currency last trading at 9.6132 crowns.

Reporting by Gertrude Chavez-Dreyfuss; Editing by W Simon and Nick Zieminski

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