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Currencies AUD Dollar Advances Despite Retails Data Miss and and Other Top Forex News.

The dollar moved higher against the other major currencies on Tuesday, but gains were limited by this mornings weaker than forecast U.S. retail sales data. With U.S. retail sales growing by just 0.1% in April, compared with growth of 1.5% the previous month, according to figures released by the Commerce Department.

After the news the dollar consolidated gains against the single currency, which came under pressure earlier following reports that Germany’s Bundesbank would back monetary easing measures by the ECB if they were needed to keep persistently low levels of inflation from becoming entrenched in the euro zone.

And there was more bad news for the single currency following data which showed that German economic sentiment slumped to a 16-month low in May.

The ZEW Centre for Economic Research reported that its index of German economic sentiment dropped to 33.1 this month from 43.2 in April. Analysts had expected a reading of 41.0.

During today’s session EUR/USD fell 0.41% to 1.3701.

In Asia the dollar strengthened against the yen, which weakened for a third day against the dollar as signs that tensions in Ukraine and Russia are easing and a rally in stocks damped demand for safer assets.

USD/JPY ended the session up 0.17% at 102.31.

And the pound continued to slide against the dollar after last weeks gains. But it didn’t fall too far as demand for sterling continues to be underpinned by expectations for a U.K. rate hike in the early part of next year.

GBP/USD closed the session down -0.25% at 1.6826.

Elsewhere, the Australian dollar fell following signs that China’s economy continues to contract, after data on Tuesday showed that industrial production and retail sales in China slowed in April, while soft domestic housing reports also weighed.

AUD/USD closed the session down -0.06% at 0.9356.

And the New Zealand dollar was marginally higher following this mornings U.S. retail sales miss. Traders are now looking ahead to tomorrow’s twice-yearly financial stability report from the New Zealand’s central bank’s, along with first quarter retail sales data.

NZD/USD ended the session up 0.16% at 0.8634.

Finally, the Canadian dollar was a little lower following this mornings softer-than-expected retail sales in the U.S.

USD/CAD inched up 0.13% to close at 1.0910.

More coverage of today’s session.

  • FT: Central bank divergence will hit pound. – Last week Mario Draghi had his say and the market now reckons the European Central Bank is likely to ease policy next month. On Wednesday it is Mr Carney’s turn. But when the Bank of England governor delivers his second-quarter inflation report and news conference the focus will be on how soon he may have to tighten.
  • WSJ: Bundesbank open to significant ECB stimulus in June if 2016 inflation forecasts lowered. – Germany’s central bank is willing to back an array of stimulus measures from the European Central Bank next month, including a negative rate on bank deposits and purchases of packaged bank loans if needed to keep inflation from staying too low, a person familiar with the matter said.

More Top Stories:

FT: U.S. calls on China to do more to overhaul exchange rate policy.Jack Lew, US Treasury secretary, has called on Beijing to renew a pledge to overhaul its exchange rate policy in his first visit to the Chinese capital since the renminbi began to reverse its climb against the dollar earlier this year.

FT: Emerging markets forex rally may yet fizzle. – Only one EM currency – China’s renminbi – has weakened since January, and even then only because the central bank wanted it to fall. The gains elsewhere have been extraordinary. Brazilian equities, for example, are up more than a quarter in dollar terms, on the back of a currency up 9 per cent. Turkey’s lira is up 8 per cent. Even Argentina’s much-hated peso is slightly up. The question for investors is whether the rally reflects reality.

Richard Cox: ECB will prevent further euro strength. – Systemic problems in the eurozone remain intact. All of these factors combined with the ECB’s stated policy stance suggest that further bullish moves in euro assets should be limited.

WSJ: Canadian dollar little changed after ceding earlier gains. – The Canadian dollar is little changed Tuesday morning, jumping modestly higher after softer-than-expected retail sales in the U.S. and then relinquishing those gains.

WSJ: Australian dollar nudges lower ahead of expected tough budget. – The Australian dollar edged lower Tuesday ahead of the conservative government’s 2014-15 budget, which is expected to include tax increases and spending cuts amid moves to accelerate repair the budget deficit.

WSJ: New Zealand dollar tad higher but treading water. – The New Zealand dollar was trading slightly higher late Tuesday but remained tightly range bound.

Businessweek: Gold futures seen falling as U.S. equities gain, dollar rallies. – Gold futures are poised to fall as U.S. equities climbed to a record and the dollar’s rally curbed demand for the metal as an alternative investment.