The U.S. currency appreciated versus the Australian dollar and the Swiss franc as Cleveland Fed President Sandra Pianalto said inflation is faster than she would like. The pound dropped against the dollar as London's property market had the most widespread price declines last month in at least 14 years.
Retail sales excluding autos in the U.S. rose 0.5 percent last month, following a revised 0.4 percent increase the previous month, the Commerce Department said in Washington. The median forecast of 74 economists surveyed by Bloomberg News was for a 0.2 percent increase. Total sales fell 0.2 percent, as economists forecast.
U.S. inflation is a ``key risk'' to the economy, Pianalto of the Cleveland Fed said in a speech in Paris today. While interest-rate cuts since September are ``compatible with a low and stable inflation rate,'' prices are rising ``somewhat faster than I would prefer,'' she said.
Fed Chairman Ben S. Bernanke said financial markets remain unsettled and the central bank will increase its auctions of cash to banks as needed.
Futures on the Chicago Board of Trade show a 90 percent chance the Federal Reserve will hold its target lending rate at 2 percent at its next meeting on June 25, compared with 86 percent odds yesterday. The balance of bets is for a cut of a quarter-percentage point. There's a 22 percent chance of an increase to 2.25 percent in September.