June 11th, 2010
08:36 PM ET

Dollar, treasurys rise on disappointing retail sales

A look at the day's business news:

Dollar rises on downbeat retail sales 
 
The dollar turned higher Friday after data showed U.S. retail sales were surprisingly weak in May, sparking risk aversion.

The greenback gained 0.5 percent against the euro at $1.2062 and added 1.4 percent against the British pound to $1.4513. The dollar also gained against the Japanese yen, rising 0.3 percent to ¥91.63.

On Thursday, the euro rose 0.9 percent against the dollar after the European Central Bank said it would maintain its liquidity measures, easing some fears
of debt crisis in the zone. Earlier in the week the euro fell to $1.18, a level not seen since the currency's debut on Jan. 4, 1999.

The dollar had been close to flat early Friday, but at 8:30 a.m. ET the Commerce Department released a disappointing retail sales report for May. Sales fell by 1.2 percent last month where economists expected them to rise 0.3 percent. Sales excluding autos, a figure that aims to strip out volatility, fell by 1.1 percent. They were expected to have risen 0.1 percent.

The downbeat report sparked concerns that the U.S. recovery is not yet in swing, which sent investors to the safe-haven dollar. Consumer spending accounts for two-thirds of U.S. economic activity, so retail sales reports are closely watched to gauge recovery progress.

Dow posts 1st weekly gain in a month 
 
Stocks turned up during the last hour of trade Friday after a choppy session, erasing deep losses triggered by a disappointing retail sales report, and the Dow posted its first weekly gain in a month. 

The Dow Jones industrial average added 39 points, or 0.4 percent. The index was down as much as 90 points earlier in the session, with pressure from a decline in the consumer sector and energy shares.

The S&P 500 index rose 5 points, or 0.4 percent, and the Nasdaq composite gained 25 points, or 1.1 percent. Like the Dow, the other indexes started sharply lower and bounced between negative and positive territory throughout the session. Both indexes finished higher on the week.

Stocks sank at Friday's open as investor digested an unexpected 1.2 percent drop May retail sales, but trimmed those losses following a report that showed a rise in consumer confidence. 

 Oil retreats after retail sales disappoint 
 
Oil broke its winning streak Friday, falling for the first time in four days after a government report showed retail sales dropped unexpectedly last month.

Crude oil for July delivery fell $1.70, or more than 2 percent, to settle at $73.78 a barrel on Friday. Despite the decline, prices jumped 3 percent this week after reports showed that crude supplies dropped more than expected last week and China said exports and imports surged in May.

The national average price for a gallon of regular unleaded gasoline fell to $2.704 from the previous day's price of $2.706, according to motorist group AAA.

The Commerce Department reported Friday that retail sales fell 1.2 percent in May, disappointing economists who were expecting a
0.2 percent rise. The decline, which was the first and largest since September, reinforced investors' worries about the health of the U.S. economy.

Treasurys rise on disappointing retail sales 
 
Treasurys rallied Friday after a disappointing retail sales report sparked renewed concerns about the economic recovery.

What prices are doing: The benchmark 10-year note rose 27/32 to 102-11/32, pushing the yield down to 3.22 percent on Friday from 3.31 percent late Thursday. Bond prices and yields move in opposite directions.

The 30-year bond rose 1-21/32 to 104, yielding 4.14 percent. The 5-year note jumped 14/32 to 100-16/32 and yielded 2.02 percent, while the 2-year note was up more than 3/32 to 100-1/32, yielding 0.73 percent.

Treasury prices rallied after a disappointing report on retail sales sparked renewed fears about the strength of the U.S. economy.

The Commerce Department reported that retail sales surprisingly fell by 1.2 percent in May, sending wary investors fleeing toward the relative safety of government-backed bonds.

Since Treasury bonds are backed by the U.S. government, investors view
them as low-risk investments that are attractive during times of economic
uncertainty. 

CNNMoney.com reporters Blake Ellis, Julianne Pepitone, Chavon Sutton and Hibah Yousuf contributed to this report.

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