© Reuters. FILE PHOTO: United States one-dollar bills appear on a light table in the Washington Bureau of Engraving and Printing. Photograph: Gary Cameron/Reuters
Written by Karen Britel
NEW YORK (Reuters) – A rally rebounded from a one-year low against a basket of currencies on Friday after some components of March retail sales were not as weak as some economists had feared, while a key Federal Reserve official warned that the central bank The US needs to continue to raise interest rates to bring down inflation.
The dollar rebounded from an initial decline after data showed that US retail sales fell more-than-expected in March as consumers cut back on purchases of cars and other expensive goods.
Core retail sales, which closely correspond to the consumer spending component of gross domestic product, fell 0.3% last month. However, despite the decline in March, gains in January and February put consumer spending firmly on track for acceleration in the first quarter.
“It was generally on the weak side except for the retail sales watch group, which is super core retail sales, and it was a little bit less negative than expected and makes you think the market was probably looking for something much weaker,” said Mazen Issa, senior foreign exchange analyst at TD Securities. in New York.
Economists note that in the context of a very strong January, the data still reflects a strong quarter.
“Personal consumption declined in February and March, but this followed a huge jump in spending momentum in January,” Jefferies money market economist Thomas Simmons said in a note. “The bottom line is, the weakness in February and March looks woeful in isolation, but the quarterly averages are much stronger because of the spending spree in January.”
The dollar index rose 0.57% on the day at 101.53 after falling to 100.78, the lowest level since last April. And it remains on track for its fifth straight week.
The euro fell 0.44 percent to $1.0999 after reaching $1.10755, the highest level since last April. The dollar rose 0.91% against the Japanese yen, to 133.78.
Investors are anticipating the possibility that the Federal Reserve may need to cut interest rates later this year due to an expected slowdown but the economy is still relatively strong, making for volatile trading.
“The main issue is that you are slowing down,” Issa said. “I think what’s being overlooked is that it can take longer for things to unfold, it may be grinding, and the American economy is more resilient than people have given it credit for.”
Other data on Friday showed that US consumer confidence rose slightly in April, but households expected inflation to pick up over the next 12 months. Production at US factories also fell more than expected in March, but posted modest gains in the first quarter.
Federal Reserve Governor Christopher Waller said on Friday that despite a year of strong rate hikes, US central bankers have “not made much progress” in getting inflation back to their 2% target and need to raise interest rates further.
Meanwhile, Atlanta Fed Chairman Rafael Bostick said another quarter-percentage-point increase in interest rates could allow the Fed to end its tightening cycle with some confidence that inflation will steadily return to its 2% target.
Chicago Fed President Austin Goolsby also said that a recession in the US is certainly possible because the Fed’s sharp interest rate increases over the past year permeate the entire economy.
Fed fund futures traders are pricing in an 81% chance that the Fed will raise an additional 25 basis points at its May 2-3 meeting.
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The currency bid prices at 3:00 pm (1900 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar index 101.5300 100.9700 +0.57% -1.894% +101.7500 +100.7800
EUR/USD 1.0999 USD 1.1048 -0.44% + 2.65% + 1.1076 USD + 1.0973 USD
USD/JPY 133.7750 132.5800 +0.91% +2.04% +133.8250 +132.1800
EUR/JPY 147.12 146.43 +0.47% +4.86% +147.1500 +146.2500
USD/CHF 0.8938 0.8898 +0.47% -3.32% +0.8958 +0.8869
GBP/USD 1.2414 USD 1.2523 -0.87% + 2.65% + 1.2546 USD + 1.2399 USD
USD/CAD 1.3359 1.3339 +0.15% -1.40% +1.3395 +1.3303
AUD/USD $0.6706 $0.6784 -1.16% -1.63% + $0.6806 + $0.6695
EUR/CHF 0.9831 0.9827 +0.04% -0.65% +0.9845 +0.9811
EUR/GBP 0.8857 0.8819 +0.43% +0.15% +0.8858 +0.8820
0.6208 NZD 0.6297 – 1.42% -2.24% + 0.6315 NZD + 0.6196 USD
dollars / dollars
Dollar / Norway 10.3730 10.3040 +0.80% +5.83% +10.4070 +10.2890
Euro / Norway 11.4103 11.3850 +0.22% +8.73% +11.4330 +11.3774
USD/Sweden 10.3236 10.2632 +0.09% -0.81% +10.3565 +10.2379
Euro / Sweden 11.3550 11.3452 +0.09% +1.85% +11.3755 +11.3265