U.S. Dollar Climbs As Weak Retail Sales Data Dampens Sentiment
August 17 2021 - 6:43AM
RTTF2
The U.S. dollar appreciated against its major opponents in the
European session on Tuesday, amid a rise in treasury yields after
the release of weaker than expected U.S. retail sales data for
July.
Data from the Commerce Department showed that retail sales
slumped by 1.1 percent in July after climbing by an upwardly
revised 0.7 percent in June.
Economists had expected retail sales to dip by 0.3 percent
compared to the 0.6 percent increase originally reported for the
previous month.
Excluding the steep drop in sales by motor vehicles and parts
dealers, retail sales fell by 0.4 percent in July after jumping by
1.6 percent in June. Ex-auto sales were expected to inch up by 0.1
percent.
Risk sentiment deteriorated as a spike in COVID-19 cases in Asia
and elsewhere raised fears of a slowdown in global economic
growth.
Traders focus on a speech from Fed Chair Jerome Powell for more
clues on the timing of a withdrawal of monetary stimulus.
The greenback rose in the Asian session amid safe haven appeal,
as investors worry about the spread of the Delta variant of the
coronavirus and its potential impact on global growth.
The greenback advanced to a 4-day high of 1.1732 against the
euro from Monday's close of 1.1777. Should the currency rallies
again, 1.16 is possibly seen as its next resistance level.
Flash estimate from Eurostat showed that the euro area economy
recovered from a technical recession in the second quarter.
Gross domestic product grew 2 percent sequentially, in contrast
to a 0.3 percent drop in the first quarter. The quarter-on-quarter
growth rate matched the flash estimate released on July 30.
The greenback firmed to 1.3753 against the pound, its highest
level since July 26. The pound-greenback pair had ended yesterday's
trading session at 1.3841. The greenback may face resistance around
the 1.34 region, if it gains again.
Data from the Office for National Statistics showed that the UK
unemployment rate declined in the second quarter.
The unemployment rate dropped 0.2 percentage points to 4.7
percent in the second quarter. This was slightly below the expected
rate of 4.8 percent.
The greenback rebounded to 109.56 against the yen, from a low of
109.12 seen at 3:00 am ET. The pair had closed Monday's deals at
109.20. Next key resistance for the greenback is found around the
112.00 level.
Data from the Ministry of Economy, Trade and Industry showed
that Japan's tertiary activity rose for the first time in three
months in June.
The tertiary activity index rose 2.3 percent month-on-month in
June, after a 2.9 percent decrease in May.
After falling to nearly a 2-week low of 0.9100 at 8:20 am ET,
the dollar bounced off to 0.9126 against the franc. At yesterday's
trading close, the pair was quoted at 0.9122. Further rally in the
currency may challenge resistance around the 0.93 region.
The greenback moved up to near a 3-week high of 0.6904 against
the kiwi and a 9-month high of 0.7262 against the aussie from
yesterday's closing values of 0.7016 and 0.7335, respectively. The
greenback is likely to locate resistance around 0.68 against the
kiwi and 0.71 against the aussie.
The greenback rose to its highest level since July 21 against
the loonie, at 1.2631. The greenback was trading at 1.2569 against
the loonie at yesterday's close. Immediate resistance for the
dollar is likely seen around the 1.28 level.
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