FOREX-Dollar extends gains as U.S. retail slump sparks flight to safety

* Dollar holds gains against other G10 currencies
* U.S. retail sales post record fall, factory output
plummets
* Plunge in oil prices hurt Canadian dollar
* Graphic: World FX rates in 2020 https://tmsnrt.rs/2RBWI5E

By Hideyuki Sano
TOKYO, April 16 (Reuters) - A flight to safety bid pushed
the dollar higher against its peers on Thursday after dire
retail and factory data showed the severity of the collapse in
U.S. economic activity caused by the novel coronavirus outbreak.
The dollar rose 0.2% to 99.831 against a basket of six other
major currencies =USD , turning positive on the week.
The euro dropped 0.25% to $1.0881 EUR= , off its two-week
high of $1.0980 hit in the previous session, while the dollar
advanced 0.4% to 107.86 yen JPY= .
The British pound fell 0.2% to $1.2482 GBP=D4 after having
lost nearly 1% in the previous session.
"The dollar is maintaining its momentum following U.S. data
yesterday," said Kazushige Kaida, head of foreign exchange at
Tokyo Branch of State Street.
"But the main player in the market now is short-term
leveraged accounts, or hot money. It is not like a lot of
investors are taking part in this," he added.
U.S. data showing retail sales fell 8.7% in March, the
biggest decline since tracking began in 1992, underlined fears
that damage to the economy from the virus outbreak will be deep
and protracted. Consumer spending accounts for more than
two-thirds of U.S. economic activity. Separately, a report from the Federal Reserve showed
manufacturing output plummeted 6.3% last month, the biggest
decrease since February 1946.
The New York Federal Reserve also reported that its Empire
State manufacturing index, which tracks activity in the sector
for New York State, fell to an all-time low. The grim numbers poured cold water on recent improvements in
market sentiment and hopes the outbreak may be nearing its peak
with many developed countries looking to re-open their economies
as soon as next month.
"Given the scale and breadth of the U.S. shutdown, our best
guess is the economy contracts by around 13% peak-to-trough
before we start to see a rolling process of re-opening in the
United States from mid-May," said James Knightley, Chief
international economist at ING.
"This will involve some ongoing form of social distancing
meaning that a return to 'business as usual' could take many
months – we don't expect the lost output to be fully recovered
until mid-2022."
The death toll from the coronavirus in the United States
approached 31,000 on Wednesday as governors began cautiously
preparing Americans for a post-virus life that would likely
include public face coverings as the "new normal". Governors of about 20 U.S. states where the pandemic has had
a low impact believe they may be ready to start the process of
reopening their economies by President Donald Trump's May 1
target date, but a labour union chief has warned against
re-opening before making sure it is safe.
OTHER CURRENCIES
The Australian dollar fell 0.4% to $0.6293 AUD=D4 ,
reversing earlier gains as traders shrugged off
better-than-expected jobs data for not capturing the impact of
lockdowns. The New Zealand dollar lost 0.6% to $0.5961 NZD=D4 after
the Reserve Bank of New Zealand Governor Adrian Orr said
negative interest rates were not off the table in its response
to the economic fallout of the coronavirus crisis. A plunge in crude prices weighed heavily on oil producing
countries' currencies.
The Canadian dollar CAD=D4 nursed losses at C$1.4116 per
U.S. unit CAD=D4 . The Bank of Canada has added to the suite of
assets it is purchasing to cushion the blow from the pandemic.
The Mexican peso fell 1.7% to 24.4030 to the dollar MXN=D4 .
U.S. crude prices fell to an 18-year low and Brent lost more
than 6% on Wednesday after the United States reported its
biggest weekly inventory build on record.
But prices bounced back early on Thursday on hopes the build
may mean producers have little option but to deepen output cuts
as the coronavirus pandemic ravages demand. O/R