* Dollar firm after three-day shake-out of bullish positions
* Market has muted reaction to China output, retail data
* Aussie on the defensive as RBA calls for 75 cents
* FOMC next in focus, yen eyes Japan election
By Tomo Uetake and Ian Chua
TOKYO/SYDNEY, Dec 12 (Reuters) – The dollar stayed firm
against most of its major peers on Friday thanks in part to
upbeat U.S. retail sales data, while falling oil prices kept the
Canadian dollar pinned near a five-year low.
Crude oil briefly slid below $59 a barrel for the first time
in 5-1/2 years, extending a sharp decline that prompted a
surprise interest rate cut from the Norwegian central bank on
The greenback climbed as high as 119.555 yen on
Thursday, bouncing off a two-week low of 117.445, after a
closely-watched report showed U.S. retail sales rose a
forecast-beating 0.7 percent in November.
At 0615 GMT Friday, the dollar was at 118.89, up 0.2 percent
from late U.S. levels.
The U.S. retail data provided fresh evidence of underlying
momentum in that economy and highlighted the diverging outlooks
between the United States and most of the developed
“Firm November data continues to point to a hawkish
adjustment in forward guidance at next week’s FOMC meeting and
we expect this to keep the USD well supported into year-end,”
analysts at BNP Paribas wrote clients, referring to the Federal
Reserve’s policy meeting on Dec. 16-17.
The yen has been also pressured by expectations that
Japanese Prime Minister Shinzo Abe’s ruling party is on track
for a landslide victory in an election on Sunday. That would let
him claim a fresh mandate for his economic revival policies,
known as “Abenomics”.
Still, the yen’s failure to respond to sharp gains in
Japanese shares on Friday suggested many players are now keen to
take profits from their yen short positions, said chief trader
at a Japanese brokerage.
“I suspect even if some chase the dollar/yen higher on the
election outcome, speculators will come in immediately to take
profits, probably shifting market focus to the Fed.”
Japanese shares closed up 0.7 percent Friday.
The euro dipped back to $1.2370 from a near two-week
high of $1.2496. It last traded at $1.2395, hovering near the
38.2 percent retracement level of its rise from $1.2247 to
$1.2496 in the past few sessions.
The euro’s fall came after the European Central Bank’s
second offering of almost zero-cost loans to banks drew only
tepid interest, underlining fragile confidence in the euro zone
and making ECB money-printing appear all but inevitable.
Sellers hit commodity currencies hard, driving both the
Canadian and Australian dollars to fresh multi-year lows
overnight. The loonie slumped to a five-year low of C$1.1551 per
USD and was last at C$1.1537.
Its Australian counterpart touched a 4-1/2-year trough of
$0.8214. The Aussie’s decline was egged on by the head
of the Reserve Bank of Australia, who said in an interview with
a local paper that he would like to see the currency fall back
to 75 U.S. cents.
Still, the fact that RBA Governor Glenn Stevens did not
signal any urgency to cut interest rates imminently saw the
Aussie edge back to $0.8275.
That was not the case for the Norwegian crown, which skidded
to its lowest in over 10 years after its central bank
unexpectedly cut interest rates. The bank said it could ease
policy further still because lower oil prices were hurting the
economy’s growth prospects.
The dollar rallied to 7.3451 crowns, reaching a high
not seen since September 2003, on Friday. The euro jumped to a
5-1/2 year high of 9.1087 crowns
Other currencies feeling the heat of weaker oil prices
included the Mexican peso, which dropped to its lowest in
nearly six years at 14.8155 per USD overnight.
Markets reacted mutedly to three pieces of economic data
China released at 0530 GMT.
China’s industrial output grew by a less-than-expected 7.2
percent in November from a year earlier, though retail sales
expanded 11.7 percent, beating forecasts, the National Bureau of
Fixed-asset investment, an important driver of Chinese
economic activity, grew 15.8 percent in the first 11 months of
the year from the same period last year, in line with forecasts
but easing slightly.
(Editing by Jonathan Oatis and Richard Borsuk)