The dollar dropped to a monthly low versus the euro and sterling on Friday, stung by renewed hopes that coordinated action on Europe’s sovereign debt crisis will fuel a more robust global economy recovery.
With risk appetite and stocks on the rise, the safe haven dollar remained under pressure versus the riskier counterparts, including commodities-backed currencies like Canada’s loonie.
A flurry of positive economic news from the U.S. failed to give the dollar a boost.
U.S. retail sales recovered in September at their fastest pace in seven months, increasing a seasonally adjusted 1.1 percent, the Commerce Department said. Most economists expected a modest 0.8 percent increase.
The dollar dropped to $1.3893 versus the euro, its lowest in a month. The buck slumped to $1.5850 versus the sterling, also a monthly low.
The buck was about one cent above parity versus its Canadian counterpart, following the release of strong Canadian manufacturing data.
G-20 finance ministers are gathering in France, where they are expected to discuss ways to buffer the banking system from the impact of possible sovereign debt defaults in Europe.
Standard & Poor’s Ratings Services downgraded Spain’s credit rating overnight, citing rising worries over sluggish growth.
In other economic news from the U.S., import prices showed a modest increase in the month of September, according to a report released by the Labor Department on Friday, with the report also showing an increase in export prices.
The Labor Department said import prices rose by 0.3 percent in September following a 0.2 percent decrease in August.
Consumer sentiment in the U.S. has unexpectedly deteriorated in the month of October, according to a report released by Reuters and the University of Michigan on Friday.
The report showed that the consumer sentiment index dropped to 57.5 in October from 59.4 in September. The drop surprised economists, who had expected the index to edge up to 60.0.