November 15, 2003	Saturday	Ramazan 19, 1424

LONDON, Nov 14: The dollar confounded analysts on Friday by shrugging off weaker-than-expected US data on retail sales and industrial production, though the euro still posted one-day gains against the US currency in thin trading.

The single European currency was at $1.1760 in early European trading from $1.1728 late on Thursday in New York.

The dollar was at 108.32 yen from 108.11 on Thursday.

“It’s a quiet Friday market and it doesn’t take a lot to move the market,” observed Steve Barrow, currency strategist at Bear Stearns.

The euro had earlier made a run up to $1.18, but failed to make lasting gains.

This was despite news of a 0.3 per cent drop in October retail sales, following a 0.4 per cent decline in September. This was the first back-to-back fall in sales in 21 months.

Meanwhile, US industrial production rose just 0.2 per cent in October — half the gain expected by the market.

Still, US economists expressed optimism about results going forward, highlighting the marked improvement in manufacturing survey data, and the positive indications for the all-important Christmas sales season from consumer confidence figures.

The University of Michigan’s consumer sentiment index rose more than expected to 93.5 in November from 89.6 in late October. This is the highest reading since May 2002.

Mr Barrow said all in all, he would have expected the dollar to come off in wake of the data, but with liquidity thinning on a Friday afternoon, dealers bucked expectations.

Strategists still believe the dollar is in for further declines in coming weeks, particularly with geopolitical risks creeping back into the calculus.

The Bush administration’s declaration this week that it will seek to speed up “reforms” in Iraq indicates to some that Washington is increasingly concerned about the security situation there.

Meanwhile, positive US data has probably at this point already been priced into the market, making it less likely that upside surprises on US indicators will lift the dollar.

Any indication that the US will ignore WTO calls to alter its international corporate tax regime could raise the prospect of billions of dollars of sanctions from the EU.

Mr Barrow said this would be negative for the dollar.

The euro was changing hands at $1.1760 from $1.1728 late on Thursday in New York, 127.39 yen (126.79), 0.6984 pounds (0.6954) and 1.5645 Swiss francs (1.5693).

The dollar was being quoted at 108.32 yen (108.11) and 1.3305 Swiss francs (1.3378).—AFP