“Dollar Rises on Strong Retail Sales Data”, “The dollar saw an uptick in strength on Tuesday in New York following a retail sales report that exceeded initial expectations. Despite the positive economic data, market sentiment regarding the Federal Reserve’s interest rate trajectory remained largely unchanged.”
“U.S. retail sales held steady in June, defying economists’ expectations of a 0.3% decline as reported by Reuters. The slight drop in auto dealership receipts was counterbalanced by robust performance in other sectors, highlighting consumer resilience and bolstering economic growth projections for the second quarter.”
“It isn’t so much the overall number, but it’s the ex-autos number, which was up considerably more than expected,” said Joseph Trevisani, senior analyst at FX Street in New York.
“The auto sales are being depressed by interest rates so aside from that and of course the housing market, it looks like the consumer’s still doing pretty well and we all know that’s the base of the U.S. economy.”
Other data showed import prices were unchanged in June, as a rebound in the price of food was offset by lower energy prices, giving the Fed cushion to cut interest rates this year.
The dollar index, which measures the greenback against a basket of currencies, gained 0.17 per cent to 104.42. The Japanese yen weakened 0.41 per cent against the greenback to 158.64 per dollar.
Markets are still fully pricing in a rate cut of at least 25 basis points (bps) by the Fed at its September meeting, according to CME’s FedWatch Tool.
Sterling weakened 0.12 per cent to $1.2951 ahead of British inflation data due on Wednesday while the euro was down 0.14 per cent at $1.0879 ahead of a European Central Bank (ECB) policy meeting scheduled for Thursday.
