FOREX - Dollar down broadly; Bernanke helps briefly

By Nick Olivari

NEW YORK (Reuters) - The dollar fell on Monday as a rise in U.S. retail sales failed to change the outlook for U.S. interest rates and disagreement among Asian and U.S. leaders on exchange rates weakened the greenback.

The dollar managed a brief rally off lows after Federal Reserve Chairman Ben Bernanke said the U.S. central bank is attentive to changes in the currency. But as investors digested his comments, they decided there were no signals of change to monetary policy.

Traders focused on the failure of China and the United States to reach an agreement on currencies at an Asia Pacific summit, suggesting China may not be ready to let the yuan rise against the dollar. That prompted investors to sell dollars against free-floating currencies such as the euro.

The bigger-than-expected 1.4 percent rise in U.S. retail sales last month encouraged some risk tolerance on signs the U.S. consumer was stirring, though it was not enough to alter the view record low U.S. interest rates will persist well into 2010.

That left investors continuing to favor higher-yielding currencies and assets over the dollar.

"The data was by and large decent, and since good data at this point isn't going to ease the Federal Reserve's underlying concerns about employment and credit conditions, (the Fed's) not likely to raise rates soon," said Matthew Strauss, senior currency strategist at RBC Capital Markets in Toronto.

The euro rose 0.3 percent to $1.4965 after stopping just shy of $1.50 earlier. Sterling rose 0.7 percent to $1.6811 while the dollar fell 0.3 percent at 89.13 yen .

The yen also got a boost from data showing Japan's economy grew at its fastest pace in more than two years between July and September.