News Column

Dollar Advances Against Majors

August 11, 2014

CANBERA (Alliance News) - The US dollar strengthened against the other major currencies in European deals on Monday, as traders await US retail sales for July, due this week.

The retail sales data, due Wednesday, is expected to show a gain for the sixth consecutive month, amid signs of strong rebound in the US economy. Economists expect the retail sales to have risen by 0.2% on month in July, the same pace of growth registered in June.

Excluding auto sales, retail sales are seen at 0.4% on a monthly basis, unchanged from June reading.

In prepared remarks for a speech to an economic conference in Sweden, Vice Chairman Stanley Fischer stated today that the recovery of the US and other global economies have been disappointing. Long-run annual growth in the US had fallen to between 2 and 2-1/4%, well below the FOMC's projections in 2009, Fischer said.

"But it is also possible that the underperformance reflects a more structural, longer-term shift in the global economy," Fischer noted.

Signs of a slowdown of growth in the productive capacity of the economy, especially in the growth in labor supply, capital investment, and productivity would have hold down growth during recession, he added.

The greenback that ended Friday's trading at 0.9052 against the franc advanced to 0.9065 and held steady thereafter. The next possible upside target for the greenback-franc pair is seen around the 0.91 area.

Switzerland retail sales recovered strongly in June, provisional results from the Federal Statistical Office showed.

Retail sales grew by real 3.4% year-over-year, following May's 0.5% fall.

The greenback rose back against the pound with pair trading at 1.6776, off an early low of 1.6793. The greenback may find resistance around the 1.67 level.

The greenback climbed to 1.3382 against the euro, compared to 1.3408 hit at Friday's close. If the greenback continues gain, it may find resistance around the 1.33 zone.

The greenback advanced to a 4-day high of 102.18 against the yen in Asian deals, before holding steady thereafter. Next key resistance for the greenback is likely be found at the 103.00 region. At last week's close, the pair was worth 101.99.

The Bank of Japan said the economy is set to continue its moderate recovery trend as the effects of sales tax hike are expected to wane gradually.

Further, in its monthly report, the bank said exports are likely to head for a moderate increase mainly against the background of the recovery in overseas economies.

The greenback recovered to 0.9261 against the Australian dollar, after having fallen to 0.9285 in prior deals. The greenback may possibly challenge resistance at the 0.92 mark. The pair traded at 0.9272 at Friday's close.

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Source: Alliance News

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