Dollar Heads for Monthly Gain

The dollar was headed for a second straight monthly advance against the euro as rising stocks and signs of improving economic growth boosted investor confidence in U.S. assets.

The U.S. currency also traded close to a three-month high versus the yen as traders increased bets the Federal Reserve will raise interest rates later this year. The euro also fell today against the dollar after retail sales in Germany, Europe's largest economy, unexpectedly dropped in April.

The dollar touched $1.5461 per euro, the strongest level since May 16, before trading at $1.5508 as of 8:38 a.m. in New York, from $1.5519 yesterday. It has risen 0.7 percent this month. The dollar traded at 105.60 yen, from 105.50 yesterday, when it reached 105.87, the highest since Feb. 28. The euro traded at 163.76 yen, from 163.71 yen yesterday.

The dollar got a boost after a government report showed U.S. personal income was stronger in April than economists expected. Incomes grew 0.2 percent, bolstered in part by the government's tax rebates, after a 0.4 percent increase the prior month. The median forecast was for a drop to 0.1 percent.

The U.S. economy expanded at a 0.9 percent annual pace last quarter, faster than the Commerce Department's April 30 estimate of 0.6 percent, the government said yesterday. U.S. durable goods orders excluding transportation equipment rose 2.5 percent in April. The median forecast in a Bloomberg survey was for a 0.5 percent drop.

Sales at German retailers, adjusted for inflation and seasonal swings, fell 1.7 percent from March, when they dropped 2.2 percent, the Federal Statistics Office in Wiesbaden said today. Economists in a Bloomberg News survey forecast a gain of 0.6 percent.

Dollar Heads for Monthly Gain, Bloomberg
5/30/2008 6:45:58 AM