FOREX-Dollar climbs on surprise jump in retail sales

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By Steven C. Johnson

NEW YORK, Feb 13 (Reuters) - The dollar rose to a one-month high against the yen on Wednesday after government data showed an unexpected rise in U.S. retail sales last month, momentarily dampening views that the U.S. economy is contracting.

The small gain in January retail sales bucked expectations for monthly U.S. cash register receipts to show their first back-to-back drop in 4-1/2 years.

"The data is clearly a surprise to the upside. It is somewhat reassuring to a market that had been concerned with a slowdown in consumer spending, which of course raises the risk of a recession," said Omer Esiner, market analyst at Ruesch International in Washington.

"On balance, the report is dollar-positive, although I don't think it changes the outlook for further (Federal Reserve interest) rate cuts," Esiner said. "But in the near term, it does ease some recession concerns."

The dollar jumped against the yen after the data, rising to a one-month high of 108.22 yen <JPY=> before easing to 108.11 yen, up 0.8 percent from late Tuesday.

Dealers reported substantial selling interest above 108 yen, suggesting the greenback may have difficulty holding above that level for long.

CMC Markets analyst Ashraf Laidi said the dollar could run out of steam later in the session as traders scale back positions ahead of Thursday's testimony by Fed Chairman Ben Bernanke, who may signal more rate cuts to come.