US dollar declines despite increasing sales in August

The Swiss National Bank raised interest rates by a quarter of a percentage point on Thursday, but signaled that it will not pursue further rate hikes aggressively. The three-month rate was raised to 1.75 percent as the Bank reaffirmed that it would stick to its policy of gradual tightening. The rate hike did not benefit the Swiss franc, which was down by 0.2 percent to SFr1.2477 versus the US dollar by mid-session in New York. The Swissie was also 0.2 percent lower against the euro, to SFr1.5905.

The Central Bank of Iceland also issued an interest rate increase Thursday, sending its key policy rate up half a percentage point to 14 percent and saying that further increases were possible. The Icelandic krona fared better in the face of the rate hike, adding 0.6 percent in relation to the euro to IKr88.70 and gaining 0.7 percent to IKr69.77 versus the greenback.

The US dollar was higher early in the day after new data showed that US sales were up 0.2 percent in August even though a decline of 0.1 percent had been expected. After the initial reaction to the new figures, however, the dollar fell back and was trading at 0.4 percent lower in relation to the euro, to $1.2741.

Sterling was helped by new sales figures in the UK, where retail sales were up by an expected 0.3 percent in August, while the July number were upgraded to even from the originally reported decline of 0.3 percent. The property market was also shown to be growing, as were non-store sales such as internet and mail order sales. The UK currency added 0.4 percent to £0.6739 versus the euro and was up 0.7 percent to $1.89 against the greenback.

The New Zealand dollar was up 1 percent versus its US counterpart to $0.6607 after the central bank there kept interest rates at 7.25 percent said that there would be no cuts in the offing soon and warned that there could be further increases soon.

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