Author: Chibuike Oguh
NEW YORK (Reuters) – The U.S. dollar gained against major currencies on Tuesday after better-than-expected retail sales data showed economic momentum as markets braced for changes in interest rates from the Federal Reserve and other central banks.
On Tuesday, Commerce Department data showed U.S. retail sales beat expectations, jumping 0.7% in November, led by increases in motor vehicle and Internet purchases.
Markets expect the Fed to cut interest rates by 25 basis points at the end of its two-day policy meeting on Wednesday, with futures pointing to a nearly 97% chance of a cut, according to CME’s FedWatch tool.
Against the Swiss franc, the dollar fell 0.2% to 0.89270 in choppy trading, after holding near its highest level since July. The euro, which is down almost 5% against the dollar this year, fell 0.24% to $1.048825.
The rate – which pits the currency against six others – rose 0.17% to 106.97, after hitting 107.08 during the session.
“The market is trying to debate whether it’s time to weaken the dollar, which has had an incredible run this year,” said Marvin Loh, senior global market strategy specialist at the firm Stanowa Street (NYSE:) in Boston.
“But it seems like it’s really hard to push back against U.S. exceptionalism and a stronger dollar coming into the new administration, whether we’re talking about the Fed probably not going to seem as dovish as it was in September or the challenges that continue to emerge in emerging and developed markets that make the dollar a safe haven.”
The pound sterling rose against the dollar after data showed UK wage growth rose stronger than expected in the three months to October. The Bank of England will announce its decision on interest rates on Thursday. The pound sterling strengthened 0.16% to $1.27040.
The yen strengthened against the dollar as markets reduced the chances of the Bank of Japan raising interest rates this week in favor of a hike in January. It rose 0.42% against the dollar to 153.52 per dollar.
The dollar weakened 0.06% to 7.287 offshore as gloomy expectations for China’s economic growth pushed yields near record lows.
The Australian dollar weakened by 0.6% against the dollar to $0.6332, while the Swedish krona weakened by 0.76% against the dollar to $10.964. The Norwegian krone also fell 0.56% to 11.2052 against the dollar.
Sweden’s Riksbank is expected to cut interest rates by as much as half a point this week, while Norges Bank is likely to leave interest rates unchanged.
rose as high as $108,379.28, reaching near $110,000, before trading higher and rising 0.68% to $106,798.26.
“I think the market is concerned that there will only be two cuts in the next year (of the Fed’s closely watched scatter chart), so it’s a bit of a positive outcome for the dollar,” said Steve Englander, global head of G10 FX Research and Macro Strategy for the Americas Northern at Standard Chartered (OTC:) Bank in New York.
Currency offer prices from December 17 at 20:55
GMT
Description RIC Latest US Close Previous session Change percentage from the beginning of the year Pct High rate Low rate
Dollar Index 106.97 106.79 0.19% 5.52% 107.08 106.69
Euro/Dollar 1.0487 1.0514 -0.25% -4.99% 1.0536 $1.0479
Dollar/Yen 153.53 154.125 -0.56% 8.66% 154.245 153.185
Euro/Yen 161.01 162.03 -0.63% 3.46% 162.47 160.78
Dollar/Swiss 0.8928 0.8947 -0.21% 6.08% 0.8975 0.8916
Pound sterling/dollar 1.2706 1.2684 0.16% -0.17% 1.2728 $1.2669
Dollar/Canadian 1.4312 1.4243 0.5% 7.98% 1.4324 1.4233
Australian/Dollar 0.6332 0.6371 -0.61% -7.13% $0.6378 $0.6332
Euro/Switzerland 0.9361 0.94 -0.41% 0.81% 0.9417 0.9356
Euro/pound sterling 0.8252 0.8286 -0.41% -4.8% 0.8295 0.825
New Zealand dollar/dollar 0.575 0.5783 -0.55% -9% $0.5793 0.5751
Dollar/Norway 11.2061 11.1429 0.56% 10.56% 11.2146 11.1343
Euro/Norway 11.7517 11.7229 0.25% 4.7% 11.774 11.7184
Dollar/Sweden 10.9697 10.8745 0.88% 8.97% 10.9713 10.8712
Euro/Sweden 11.5048 11.4389 0.58% 3.41% 11.5085 11.4402
