Dollar Jumps as Retail Sales Confirm Strong US Economy
The dollar jumped to an 11-week high on Thursday after data showed that U.S. retail sales increased slightly more than expected in September, boosting confidence that the U.S. economy remains strong.
It followed a relatively muted currency reaction to the European Central Bank's decision to cut rates by 25 basis points, as expected.
U.S. retail sales rose 0.4% last month after an unrevised 0.1% gain in August. Economists polled by Reuters had forecast retail sales would rise 0.3%.
The dollar index was last up 0.16% at 103.70, having risen as high as 103.87, its highest since August 2.
The euro was down 0.25% at $1.0834, having earlier reached $1.0811, the lowest since August 2. The yen weakened 0.07% against the greenback to 149.76 per dollar and earlier traded at 150.08, the weakest since August 1.
A much stronger than expected jobs report for September raised optimism that the U.S. economy remains in good shape.
Fed officials including Fed Chair Jerome Powell have pushed back against the prospect of additional 50 basis point rate cuts since the U.S. central bank in September surprised some market participants with the larger than usual rate reduction.
Traders are now pricing in 44 basis points of additional cuts by year-end, or a less than 100% chance of a 25 basis point cut at both of the Fed’s next two meetings. They had previously seen a further 50 basis point cut as likely at one of these meetings.
Betting site Polymarket, meanwhile, shows improving odds of a victory by Donald Trump at November’s U.S. presidential election.
A Trump administration is expected to introduce new tax cuts, loosen business regulations and enact new tariffs, which analysts say could increase growth and inflation.
The ECB said on Thursday that inflation in the euro zone was increasingly under control while the outlook for the wider economy was worsening.
The Australian dollar rose after Australian employment data beat forecasts for a sixth straight month in September.
The Aussie was last up 0.36% versus the greenback at $0.669.
Source : Reuters
