News Column

US Dollar Declines As Retail Sales Miss Forecast

August 13, 2014



CANBERA (Alliance News) - The US dollar fell against its most major counterparts on Wednesday, as retail sales in the US turned flat in July, signaling that economic recovery is losing momentum in the second-half of the year.

According to a report released by the Commerce Department, US retail sales were virtually unchanged in July, defying forecasts for a 0.2% increase. The retail sales edged up by 0.2% in June.

Excluding a modest drop in auto sales, retail sales inched up by 0.1% in July compared to a 0.4% increase in the previous month.

The weak data also raised speculation that the Federal Reserve may keep its low interest rates for a considerable period, suggesting tepid recovery.

The greenback hit a 5-day low of 0.9045 against the franc, compared to a high of 0.9098 hit at 5:30 am ET. The greenback may possibly face downside target around the 0.90 zone. The pair was trading at 0.9074 at yesterday's close.

The greenback reversed from an early high of 1.3341 against the euro, falling to a 2-day low of 1.3410. At Tuesday's New York session close, the pair was worth 1.3368. Next key support for the greenback may be eyed around the 1.35 region.

Eurozone industrial production declined for the second straight month in June, figures from Eurostat showed.

On a monthly basis, industrial production dropped 0.3% in June, much slower than May's 1.1% decline. Economist had forecast a 0.4% growth for the month.

Having advanced to a 1-week high of 102.50 against the yen in early deals, the greenback eased back with pair trading around yesterday's closing value of 102.25. Further weakness may see the greenback challenging support at the 101.5 mark.

Japan's gross domestic product tumbled 6.8% on year in the second quarter of 2014, the Cabinet Office said in today's preliminary reading.

That beat forecasts for a decline of 7.1% following the downwardly revised 6.1% gain in the first quarter

The greenback slipped to 1.0906 against the loonie, its weakest since August 7. The greenback-loonie pair was worth 1.0921 when it closed deals on Tuesday. The greenback is likely to challenge support around the 1.085 mark.

The greenback declined to a 1-week low of 0.9319 against the aussie and a 5-day low of 0.8478 against the kiwi, coming off from its early highs of 0.9263 and 0.8418, respectively. The greenback is poised to challenge support around 0.94 against the aussie and 0.855 against the kiwi.

On the flip side, the greenback held steady against the pound, following more than a 2-month high of 1.6698 set in previous deals. This may be compared to an early 6-day low of 1.6842. The pair ended Tuesday's trading at 1.6810.

The Bank of England reduced its wage growth estimate and reiterated that the increase in interest rate will be gradual.

"In light of the heightened uncertainty about the current degree of slack, the committee noted the importance of monitoring the expected path of costs, particularly wages, the BoE said in its quarterly Inflation Report.

The US business inventories for June are due shortly.



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Source: Alliance News


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