U.S. Dollar Moves Up As Strong Retail Sales Data Sparks Rate Cut Uncertainty
January 17 2024 - 6:52AM
RTTF2
The U.S. dollar firmed against its major counterparts in the New
York session on Wednesday, as strong retail sales data for December
reduced the possibility of a rate cut by the Federal Reserve in
March.
Data from the Commerce Department showed that U.S. retail sales
increased more than expected in December.
The report said retail sales climbed by 0.6 percent in December
after rising by 0.3 percent in November. Economists had expected
retail sales to advance by 0.4 percent.
Excluding a jump in sales by motor vehicle and parts dealers,
retail sales rose by 0.4 percent in December after inching up by
0.2 percent in November. Ex-auto sales were expected to edge up by
another 0.2 percent.
Hawkish comments from Fed Governor Waller triggered a surge in
the dollar on Tuesday, which extended today as well.
With inflation close to the central bank's goal, it is likely
that interest rate cuts could begin this year, Waller said in a
speech at the Brookings Institute.
But the Fed governor cautioned that there is no need to rush
towards a rate cut as in the past.
The greenback appreciated to 5-week highs of 1.0846 against the
euro, 1.3541 against the loonie and 0.6088 against the kiwi, off
its early lows of 1.0884, 1.3480 and 0.6151, respectively. The next
possible resistance for the currency is seen around 1.05 against
the euro, 1.37 against the loonie and 0.59 against the kiwi.
The greenback firmed to a 1-1/2-month high of 148.38 against the
yen and near a 2-month high of 0.6524 against the aussie, from its
early lows of 147.05 and 0.6594, respectively. The greenback may
find resistance around 151.00 against the yen and 0.63 against the
aussie.
The greenback touched 0.8672 against the franc, its highest
level since December 19. The greenback is likely to find resistance
around the 0.90 level.
The greenback rebounded against the pound and was trading at
1.2658. This may be compared to a previous 5-week high of 1.2596.
On the upside, 1.24 is possibly seen as its next resistance
level.
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