U.S Dollar Propels High On Strong Retail Data
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As a result of better-than-forecast retail sales data released recently, the greenback reached three-week peaks on Friday, boosting expectations for the Federal Reserve to reduce asset purchases before the end of the year.
US retail sales unexpectedly rose 0.7% in August despite expectations of a 0.8% decline, data showed on Thursday, fueling speculation about a Fed taper this year. The sentiment of business owners has also improved significantly.
As for the Michigan consumer sentiment survey for September, it rose to 71 from 70.3 last month but did not reach the levels of the Empire States and Philadelphia Fed manufacturing surveys.
US dollar demand has been awakened by expectations of a Fed taper announcement and softer risk sentiment.
This is the highest level since the third week of August for the dollar index used basically to measure how the greenback is doing against six major currencies. At last check, it was up 0.4% at 93.207 index points.
The DXY index at the end of the week gives back a part of its gains after hitting new monthly highs.
As a result, and looking at the broader outlook, the constructive stance is still present on the dollar, which is currently trading at 91.41, above its 200-day Simple Moving Average
The dollar index surged by 0.6% for the week, its biggest weekly percentage gain since mid-August.
Fed representatives are expected to talk about reducing monthly bond purchases at a meeting next week and tie any actual change in monetary policy to the growth of U.S. jobs.
In light of growing cyclical inflationary pressures, the new economic projections may offer some insight into the FOMC’s reaction function.
A number of market commentators remain convinced that inflation will remain high in the U.S. for an extended period of time, which will support higher yields in the U.S. and a strengthened dollar
This article was originally posted on FX Empire