logo
  

Disappointing U.S. Retail Sales Data Drags Dollar Down

dollar 080219 14may21 lt

The U.S. dollar drifted lower against its major counterparts in the European session on Friday, as the nation's retail sales unexpectedly stagnated in April, prompting the Federal Reserve to keep the ultra-loose monetary policy for the foreseeable future.

Data from the Commerce Department showed that U.S. retail sales were unchanged in the month of April, after surging in the previous month.

The Commerce Department said retail sales were virtually unchanged in April after soaring by an upwardly revised 10.7 percent in March.

Economists had expected retail sales to jump by 1.0 percent compared to the 9.8 percent spike originally reported for the previous month.

Excluding a notable increase in sales by motor vehicle and parts dealers, retail sales slid by 0.8 percent in April after surging up by 8.9 percent in March. Ex-auto sales were expected to climb by 0.7 percent.

Data from the Labor Department showed that U.S. import prices increased slightly more than expected in the month of April.

The Labor Department said import prices climbed by 0.7 percent in April after surging by an upwardly revised 1.4 percent in March.

Economists had expected import prices to increase by 0.6 percent compared to the 1.2 percent jump originally reported for the previous month.

Comments from several Fed officials downplaying an imminent rise in interest rates soothed some of the concerns about risks from inflation.

Federal Reserve Governor Christopher Waller said on Thursday that the factors putting upward pressure on inflation are temporary and the spike may last through 2022.

The Fed would not overreact to temporary overshoots of inflation, he added.

The dollar showed a mixed trend against its major rivals in the Asian session. While it fell against the franc and the euro, it was steady against the pound. Versus the yen, it climbed.

The greenback lost 0.5 percent to reach a 2-day low of 1.2138 against the euro. The pair was worth 1.2078 when it closed deals on Thursday. Further drop in the currency may challenge support around the 1.24 level.

The greenback was 0.4 percent lower versus the pound, at a 2-day low of 1.4096. The pound-greenback pair had ended yesterday's trading session at 1.4045. Should the greenback dips further, 1.43 is possibly seen as its next support level.

The greenback fell 0.4 percent to a 2-day low of 109.19 against the yen, from a high of 109.66 it set at 9:00 pm ET. The pair had closed Thursday's deals at 109.43. The greenback is seen facing support around the 106.00 level.

The greenback remained weaker against the franc, at a 3-day low of 0.9021. At yesterday's trading close, the pair was quoted at 0.9058. Immediate support for the greenback is likely located around the 0.88 level.

The greenback depreciated to 2-day lows of 0.7777 against the aussie and 1.2081 against the loonie, from yesterday's closing values of 0.7727 and 1.2161, respectively. Further downtrend may take the greenback to support levels of around 0.80 against the aussie and 1.19 against the loonie.

The greenback was down versus the kiwi, at a 2-day low of 0.7247. At Thursday's close, the pair was valued at 0.7178. Extension of downward trading may see the greenback finding support around the 0.74 region.

Survey from BusinessNZ showed that New Zealand manufacturing sector continued to expand in April, albeit at a slower pace, with a Performance of Manufacturing Index score of 58.4.

That's down from 63.6 in March, although it remains well above the boom-or-bust line of 50 that separates expansion from contraction.

For comments and feedback contact: editorial@rttnews.com

Market Analysis

Follow RTT