U.S. Dollar Falls As Weak Retail Sales Back Rate Cut Hopes

The U.S. dollar declined against its major counterparts in the New York session on Thursday, following the release of weaker-than-expected retail sales data for January that supported hopes of a rate cut in June.

Data from the Commerce Department showed that retail sales slid by 0.8 percent in January after climbing by a downwardly revised 0.4 percent in December.

Economists had expected retail sales to edge down by 0.1 percent compared to the 0.6 percent increase originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales fell by 0.6 percent in January after rising by 0.4 percent in December. Ex-auto sales were expected to rise by 0.2 percent.

Meanwhile, the Labor Department released a separate report showing an unexpected decline in first-time claims for unemployment benefits in the week ended February 10th.

The report said initial jobless claims fell to 212,000, a decrease of 8,000 from the previous week's revised level of 220,000.

Economists had expected initial jobless claims to inch up to 220,000 from the 218,000 originally reported for the previous week.

The greenback dropped to 2-day lows of 1.0782 against the euro, 0.8790 against the franc and 149.50 against the yen, off its early highs of 1.0723, 0.8858 and 150.56, respectively. The greenback is seen finding support around 1.10 against the euro, 0.83 against the franc and 137.5 against the yen.

The greenback fell to 2-day lows of 1.3483 against the loonie, 0.6126 against the kiwi and 0.6527 against the aussie, from its early highs of 1.3551, 0.6080 and 0.6477, respectively. The greenback is poised to challenge support around 1.30 against the loonie, 0.64 against the kiwi and 0.69 against the aussie.

The greenback declined to 1.2592 against the pound, down from a previous high of 1.2540. If the greenback falls further, it is likely to test support around the 1.31 region.