Dollar off session lows against yen, euro eases

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The U.S. dollar pulled back from session lows against the yen and eased against the euro on Tuesday following the release of a batch of mixed U.S. data.

Concerns over the U.S. debt ceiling continued to weigh on market sentiment.

During U.S. morning trade, the dollar eased back from session lows against the yen, with USD/JPY down 0.77% to 88.76, up from session lows of 88.29.

The Commerce Department said U.S. retail sales rose 0.5% in December, beating expectations for a 0.2% gain.

A separate report showed that producer prices in the U.S. fell 0.2% last month, compared to expectations for a 0.1% decline.

Dollar demand continued to remain supported amid uncertainty over the U.S. debt ceiling deadlock, after President Barack Obama urged Republicans on Monday to approve an increase in the borrowing limit without seeking policy concessions in return.

The yen strengthened broadly earlier after Japan’s Economy Minister Akira Amari said that a weak yen could have a negative impact on the economy by pushing up import prices. The comments sparked profit taking ahead of the Bank of Japan’s upcoming policy meeting next week.

The greenback trimmed gains against the euro, with EUR/USD down 0.27% to 1.3344, up from session lows of 1.3311.

Sentiment on the euro was hit after preliminary data showed that Germany’s economy contracted by 0.5% in the fourth quarter, bringing the annual rate of growth to 0.7%, a sharp slowdown from 3% growth in 2011.

A separate report showed that the euro zone trade surplus widened to EUR11 billion in November from EUR7.4 billion in October, as exports rose 5%.

The greenback was almost unchanged against the pound, with GBP/USD inching up 0.01% to 1.6080.

In the U.K., official data showed that consumer inflation remained unchanged at 2.7% in December, broadly in line with expectations, as increases in electricity and gas bills were offset by falling fuel costs.

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