By Caroline Valetkevitch
NEW YORK (Reuters) – The dollar index hit its lowest in more than three months while gold prices jumped on Wednesday as weaker-than-expected U.S. retail sales bolstered confidence the Federal Reserve will hold off raising rates soon.
Wall Street’s major indexes ended little changed after gaining early in the session on the data, which showed U.S. retail sales were flat in April as households cut back on purchases of automobiles and other big-ticket items, indicating the economy was struggling to rebound.
The dollar index, which measures the greenback against a basket of six major currencies, hit a more than three-month low of 93.461 <.DXY>.
“The market is basically convinced that the Fed is not going to do anything until the consumer shows some strength,” said Boris Schlossberg, managing director of FX strategy at BK Asset Management in New York.
The Fed has said it will raise rates only when data points to a strengthening economy. Growth in the first-quarter slowed to a crawl as a strong dollar, harsh winter and a steep fall in oil prices hurt profits and discouraged consumers from spending.
Gold jumped, rising well above $1,200 an ounce to a five-week high as the dollar fell. <XAU=>
On Wall Street, the Dow Jones industrial average <.DJI> fell 7.74 points, or 0.04 percent, to 18,060.49; the S&P 500 <.SPX> lost 0.64 points, or 0.03 percent, to 2,098.48; and the Nasdaq Composite <.IXIC> added 5.50 points, or 0.11 percent, to 4,981.69.
MSCI’s all-country world index <.MIWD00000PUS> of stock performance in 46 countries was up 0.3 percent, also helped by some signs of improved growth in Europe.
The best French growth reading in two years added to signs, including from Spain, that some of Europe’s weaker southern economies are picking up. Germany missed forecasts, however.
Germany and Italy both successfully sold government debt, and yields on the secondary market fell, but traders were skeptical as to whether this meant three weeks of turmoil on the world’s major bond markets was over.
U.S. Treasury yields ended higher in choppy trading after the Treasury saw strong demand for a new $24 billion sale of 10-year notes, a sign that higher yields are drawing some buyers back to the market.
U.S. benchmark 10-year notes <US10YT=RR> were down 9/32 in price to yield 2.29 percent, up from 2.26 percent late on Tuesday.
A dramatic sell-off in German Bunds <DE10YT=TWEB> has helped push Treasury yields higher in recent weeks. German 10-year bond yields have jumped around half a percentage point from record lows hit in mid-April.
Oil prices fell after initially rallying as worries about huge supplies weighed on the market despite a second straight week of draws in U.S. crude.
U.S. crude futures <CLc1> settled down 25 cents at $60.50 a barrel, after rallying to $61.85. Brent <LCOc1> settled at $66.81, down 5 cents. It had surged to $68.17 earlier.
(Additional reporting by Sam Forgione, Tanya Agrawal, Karen Brettell and Barani Krishnan; Editing by Jeremy Gaunt, Nick Zieminski and Ted Botha)