Dollar slides on data, U.S. growth forecast; oil up

By Rodrigo Campos

NEW YORK (Reuters) – The U.S. dollar tumbled on Tuesday, weighed down by mixed retail sales data and economic growth predictions, while crude rose after a surprise drop in forecasts for U.S. shale oil production.

Stocks edged up on Wall Street, boosted by energy shares, with investors also focused on U.S. corporate earnings and the data miss. A lower full-year earnings forecast from Johnson & Johnson due to the impact of dollar strength kept gains in check.

Angst over the stronger dollar added to a list of concerns throughout the first quarter that have lowered estimates on corporate earnings.

“Expectations are low, primarily because of economic weakness during the first quarter related to weather, the strong dollar, the West Coast dock strike and oil prices,” said Tim Ghriskey, chief investment officer of Solaris Group in Bedford Hills, New York.

The Dow Jones industrial average <.DJI> was up 68.84 points, or 0.38 percent, at 18,045.88. The Standard & Poor’s 500 Index <.SPX> was up 3.13 points, or 0.15 percent, at 2,095.56. The Nasdaq Composite Index <.IXIC> was down 14.30 points, or 0.29 percent, at 4,973.95.

The FTSEurofirst 300 <.FTEU3> index of top European shares ended down 0.45 percent after touching its highest since November 2000. Investors were spooked by a report that cash-strapped Greece was preparing for a debt default, despite a denial from its prime minister.

DOLLAR TUMBLES

Despite its recent strength, the U.S. dollar was lower on Tuesday after U.S. retail sales rose in March for the first time since last year but at a slower pace than expected.

The dollar was also hit by the International Monetary Fund’s lowered forecasts for U.S. growth, to 3.1 percent for this year and next, from January’s expectations of 3.6 percent and 3.3 percent, respectively.

“I wouldn’t be surprised if people bring down Q1 GDP forecasts on the data,” said Marc Chandler, global head of currency strategy at Brown Brothers Harriman in New York.

“Couple that with the IMF (forecasts), and I think you have reason to trim (dollar) positions,” he said.

The euro strengthened 1 percent against the greenback at $ 1.0668 following six consecutive sessions of losses. The dollar index <.DXY> fell 0.9 percent.

Crude oil rose after a forecast that U.S. shale oil output would record its first monthly decline in more than four years and on tensions in Yemen, where neighboring top oil exporter Saudi Arabia is embroiled in a civil war. [O/R]

Brent gained 1.7 percent to $ 58.93 a barrel while U.S. crude added 3.1 percent to $ 53.50.

U.S. Treasury yields fell after the retail sales data added to bets the Federal Reserve was unlikely to increase interest rates in June.

The benchmark 10-year Treasury note rose 16/32 in price to yield 1.8828 percent, down from 1.939 percent late on Monday.

Spot gold dropped for a fifth session in six, down 0.4 percent at $ 1,193.01 an ounce.

(Additional reporting by Daniel Bases, Ryan Vlastelica and Karen Brettell; Editing by James Dalgleish and Dan Grebler)