Dollar slips against euro

The dollar dipped against the euro on Wednesday as the foreign exchange market looked ahead to more US banking results after surprisingly strong earnings from titan Goldman Sachs, dealers said.

In late morning trading here, the European single currency rose to 1.4050 dollars from 1.3966 dollars in New York late on Tuesday.

The dollar firmed to 93.66 yen from 93.50 yen late Tuesday.

Calyon analyst Stuart Bennett said traders' focus was "shifting to worries about whether other US banks reporting their second-quarter earnings this week will be as robust" as those published by Goldman on Tuesday.

O Tuesday, markets had also absorbed news that US retail sales rose for the second month running in June, climbing 0.6 percent, according to better-than-expected data.

"The dollar was hampered by a 0.6-percent increase in June retail sales and by news that Goldman Sachs had made a shed load of money in the second quarter," said currency specialists Moneycorp in a note to clients.

"Anything that is good for the US economy is good for the global economy and therefore bad for the safe-haven dollar."

Goldman posted a bigger-than-expected net profit of 3.44 billion dollars for the second quarter, as it benefited from a market depleted of rivals such as Lehman Brothers and Bear Stearns as well as a weakened Citigroup.

But the initial market euphoria may cool as traders brace themselves for more US earnings reports and economic data this week including manufacturing and inflation figures due out later in the day.

Meanwhile, official EU figures released on Wednesday showed that consumer prices in the 16 euro countries fell in June for the first time on record.

The European Union's Eurostat data agency said that 12-month inflation in the eurozone fell 0.1 percent, the lowest rate on records going back to 1996 and down from 0.0 percent in May, confirming an estimate from June 30.

After hitting a record high point of 4.0 percent in June and July 2008, eurozone inflation has fallen sharply as oil and other commodity prices have collapsed in the face of a dire economic downturn.

Most economists had expected that eurozone inflation would dip briefly into negative territory but have ruled out a longer Japanese-like bout of deflation, a pernicious downward spiral in prices.

While the prospect of falling prices may delight consumers, deflation, or a run of falling prices, can wreak havoc on the broader economy as households put off purchases in hope of getting a better bargain in the future. This can cause a downwards spiral of prices, production, unemployment and further deflation.

Annual inflation in the full 27-nation EU fell 0.6 percent in June, down from 0.8 percent in May.

In trading heree on Wednesday, the euro was changing hands at 1.4050 dollars against 1.3966 dollars late on Tuesday, 131.59 yen (130.59), 0.8595 pounds (0.8562) and 1.5195 Swiss francs (1.5206).

The dollar stood at 93.66 yen (93.52) and 1.0824 Swiss francs (1.0885).

The pound was at 1.6335 dollars (1.6307).

On the London Bullion Market, the price of gold increased to 929.10 dollars an ounce from 924.75 dollars an ounce late on Tuesday.