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Dollar Higher As Strong U.S. Retail Sales Back Rate Hike Expectations

dollar 080219 16nov21 lt

The U.S. dollar firmed against its major counterparts in the European session on Tuesday, as the nation's retail sales surged more than expected in October, reinforcing expectations for a faster tightening of monetary policy by the Federal Reserve.

Data from the Commerce Department showed that retail sales spiked by 1.7 percent in October after climbing by an upwardly revised 0.8 percent in September.

Economists had expected retail sales to jump by 1.4 percent compared to the 0.7 percent increase originally reported for the previous month.

Excluding sales by motor vehicles and parts dealers, retail sales still surged up by 1.7 percent in October after rising by 0.7 percent in September. Ex-auto sales were expected to advance by 1.0 percent.

Data from the Labor Department showed that U.S. import prices jumped more than expected in October.

The Labor Department said import prices shot up by 1.2 percent in October after rising by 0.4 percent in September. Economists had expected import prices to increase by 1.0 percent.

The report showed export prices also surged by 1.5 percent in October after climbing by an upwardly revised 0.4 percent in September.

U.S.-China tensions reduced after President Joe Biden and Chinese leader Xi Jinping stressed the need to increase communication and cooperation at a virtual meeting that lasted for more than three hours.

Biden said that both leaders should ensure that their competition "does not veer into conflict."

The greenback showed mixed performance against its major peers in the Asian session. While it fell against the pound, it was steady against the franc and the euro. Versus the yen, it rose.

The greenback added 0.5 percent to hit near a 5-week high of 0.9295 against the franc. At yesterday's trading close, the pair was quoted at 0.9251. Further rally in the currency may challenge resistance around the 0.94 region.

The greenback climbed to its highest level since July 2020 against the euro, at 1.1330. The pair was worth 1.1367 when it closed deals on Monday. The greenback is likely to locate resistance around the 1.12 region.

Flash estimate from Eurostat showed that the euro area economy expanded at a slightly faster pace in the third quarter, as previously estimated.

Gross domestic product grew 2.2 percent from the prior quarter, when it was up 2.1 percent.

The greenback gained 0.4 percent against the yen, approaching near a 4-week high of 114.59. The pair had closed Monday's deals at 114.12. Should the currency rallies again, 116.00 is possibly seen as its next resistance level.

Data from the Ministry of Economy, Trade and Industry showed that Japan's tertiary activity grew in September.

The tertiary activity index rose 0.5 percent month-on-month in September, after 1.1 percent decrease in August.

The greenback was up against the aussie, at a 4-day high of 0.7314. The greenback was worth 0.7345 per aussie at Monday's New York session close. The greenback may face resistance around the 0.70 region.

The greenback touched a 4-day high of 0.6997 against the kiwi, up from Monday's close of 0.7045. Extension of the greenback's uptrend may lead it to a resistance around the 0.68 region.

The greenback reached a session's high of 1.2556 against the loonie, following a 5-day low of 1.2493 seen at 8:45 pm ET. The greenback was trading at 1.2511 against the loonie at yesterday's close. Next near term resistance for the greenback is found around the 1.27 level.

After falling to a 6-day low of 1.3473 at 3:45 am ET, the greenback bounced off to 1.3415 against the pound. Immediate resistance for the dollar is likely seen around the 1.31 level.

Data from the Office for National Statistics showed that the UK unemployment rate declined in the third quarter.

The unemployment rate decreased 0.5 percentage points on the quarter to 4.3 percent. The expected rate was 4.4 percent.

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