Dollar Held Back, Market Awaits US Retail Sales
The US dollar traded mixed against major currencies on Thursday (July 16th), with movement remaining limited as the market weighed geopolitical risks and the direction of the Fed's policy. Trading activity also tended to be quiet, indicating investors were still holding large positions.
The Bloomberg Dollar Spot Index fluctuated and remained virtually unchanged today. In the previous two sessions, the dollar index had weakened by around 0.7% as markets began to doubt the likelihood of a Fed interest rate hike this month.
Previously, the dollar received support after the United States launched another airstrike on Iran. President Donald Trump also vowed to escalate the strikes until Tehran stopped attacking ships in the Strait of Hormuz and agreed to reopen the shipping lane.
However, the dollar's gains remained subdued as investors awaited US retail sales data for June. This data is crucial for assessing the strength of American consumer spending and how it might impact the outlook for the Fed's interest rate policy. The yield on the 10-year US Treasury note rose two basis points to 4.57%.
In the currency market, GBP/USD fell 0.2% to 1.3515 after previously surging 1.1% on Wednesday, its biggest daily gain in four months. The pound found support after data showed the UK economy expanded surprisingly well in May. Meanwhile, USD/JPY fell slightly to 162.12, and EUR/USD held steady around 1.1466.
As a result, the dollar remains in a tug-of-war. More benign US inflation data dampened the chances of an imminent interest rate hike, but the Hormuz conflict and rising yields continue to cushion the dollar's weakness. If US retail sales are strong, the dollar could regain support, but if the data weakens, pressure on the greenback could continue. (arl)
Source: Newsmaker.id
