Dollar Holds Near Three-Week High After US Retail Sales Rise

US dollar banknotes can be seen in front of the stock chart displayed in this illustration taken on February 8, 2021. REUTERS / Dado Ruvic / Illustration

  • US Retail Sales Boost Fed Tightening Bets
  • Meeting of the Fed, the BoE and the BoJ next week
  • Chinese yuan stabilizes after fall on Thursday
  • Chart: Global exchange rates

LONDON, Sept. 17 (Reuters) – The dollar held close to three-week highs on Friday after better-than-expected US retail sales figures boosted bets on the strength of the US economy and the previous tightening of monetary policy.

By 07:20 GMT, the euro had climbed into positive territory but at $ 1.1783 remained close to its three-week low.

Retail sales in the United States unexpectedly rose in August, increasing 0.7% from the previous month despite expectations of a 0.8% decline, while a survey of the business climate the Philadelphia Fed also showed marked improvement. Read more

The numbers helped dampen cautious views on the U.S. economy after a moderate reading of consumer inflation and weak employment growth data earlier in the month, and revived expectations of an anticipated cut of its asset purchases by the Federal Reserve.

The more bullish mood faces another test later on Friday with the release of the University of Michigan Consumer Confidence Index, which surprised many investors last month by falling to a decade low due to lower income gains and higher inflation.

The dollar index stood at 92.799, slightly lower on the session but close to Thursday’s three-week high of 92.965.

Currency markets were generally calm on Friday and traders were reluctant to take any significant new positions ahead of a series of important central bank meetings next week, including the Fed, Bank of Japan and Bank of England.

“Despite the ongoing China Evergrande saga and the opinions of many that stocks should take a correction, risk sentiment remains surprisingly strong. Expect another calm FX trading session ahead of a busy week of central bank meetings. “, said ING analysts.

The Swiss franc recovered from its losses after hitting a five-month low against the dollar at 0.9280 francs.

The dollar climbed to 109.84 yen, after rising 0.34% on Thursday to rise from Wednesday’s six-week low of 109.11.

The yen has so far shown only limited reaction to the leadership race of the ruling Liberal Democratic Party (LDP), which officially begins on Friday ahead of the September 29 vote. The parliamentary dominance of the LDP means that the new party leader will become prime minister. Read more

“The world’s major macroeconomic players are not expecting big policy changes. The lack of movement in the yen is proof of that,” said Hiromichi Shirakawa, vice president and chief economist at Credit Suisse in Japan.

The Chinese yuan rallied slightly and rose 0.1% for the last time after falling 0.4% on Thursday.

The offshore yuan was trading at 6.447 to the dollar, under pressure from growing concerns about the Chinese real estate sector, with investors worried that real estate giant China Evergrande (3333.HK) could default on its coupon payment next week . Read more

Nonetheless, on a trade-weighted basis, the yuan was near its highest level in five years, both in the onshore (.RYYY) and offshore (.RXYH) market.

The British pound traded up 0.1% to $ 1.38.

Additional reporting by Hideyuki Sano in Tokyo; Editing by Muralikumar Anantharaman

Our standards: Thomson Reuters Trust Principles.

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