© Reuters. FILE PHOTO: A banker counts currency at a bank in Westminster, Colorado on November 3, 2009. (Reuters)/Rick Wilking/File Photo
Written by Karen Britel
NEW YORK (Reuters) – The dollar touched a 15-month low and then rebounded against a basket of currencies on Tuesday after core retail sales posted strong gains in June as investors await the Federal Reserve’s interest rate decision next week.
Major US retail sales rose less-than-expected in June, with a 0.2% increase for the month. Data for May was also revised upwards to show sales increased by 0.5% instead of 0.3% as previously reported.
Core sales showed more resilience. Excluding automobiles, gasoline, building materials and food services, retail sales rose 0.6% in June. May data was revised slightly to show core retail sales increased by 0.3% instead of the previously reported 0.2%.
The lower-than-expected headline figure indicates that “the Fed is making some progress,” says Bipan Rai, head of North American FX strategy at CIBC Capital Markets in Toronto.
However, “you still get a fairly strong control group number – that will feed into GDP and domestic demand. This is still very supportive of the fact that the Fed needs to raise interest rates again later this month,” he said. Ray said.
The dollar fell after gains in consumer and producer prices slowed in June, boosting expectations that the US central bank will stop raising interest rates after a widely expected 25 basis point increase at its July 25-26 meeting.
Fed fund futures traders are pricing in an additional 32 basis points to narrow this year, with the benchmark rate expected to peak at 5.39% in November.
Traders will also be watching inflation data from regions including the Eurozone, Britain and Japan this week for more clues as to whether inflation is slowing globally.
It was last up 0.06% on the day at 99.956, after dropping earlier to 99.549, the lowest level since April 2022.
The euro fell 0.02 percent to $1.1226, after earlier hitting $1.12760, the highest level since February 2022.
European Central Bank (ECB) Governing Council member Claes Nott said on Tuesday that the bank will look closely for signs of slowing inflation in the coming months to avoid raising interest rates too far.
The European Central Bank is expected to raise interest rates by 25 basis points next week.
The dollar rose 0.03% against the Japanese yen to 138.71, after falling to 137.245 on Friday, the lowest since May 17.
The British pound was little changed at $1.3074, after reaching $1.31440 on Thursday, the highest level since April 2022.
The Australian dollar fell 0.15% to $0.6807 after minutes from the Reserve Bank of Australia (RBA) July policy meeting released on Tuesday did not provide any major surprises on the interest rate outlook.
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Coin offer prices at 10:00 am (1400 GMT)
Description RIC Last US Close Pct Change YTD Pct High Bid Low Bid
previous change
a class
Dollar Index 99.9560 99.9030 +0.06% -3.415% +100.0300 +99.5490
EUR/USD $ 1.1226 $ 1.1228 -0.02% + 4.77% + 1.1276 $ + 1.1218 $
USD/JPY 138.7100 138.6950 +0.03% +5.82% +138.9200 +137.6900
EUR/JPY 155.71 155.86 -0.10% +10.98% +156.1400 +154.8800
USD/CHF 0.8587 0.8603 -0.19% -7.13% +0.8607 +0.8556
GBP/USD 1.3074 USD 1.3074 + 0.01% + 8.12% + 1.3125 USD + 1.3064 USD
USD/CAD 1.3214 1.3199 +0.13% -2.47% +1.3243 +1.3185
AUD/USD $0.6807 $0.6817 -0.15% -0.15% + $0.6837 + $0.6789
EUR/CHF 0.9638 0.9668 -0.31% -2.60% +0.9672 +0.9634
EUR/GBP 0.8584 0.8589 -0.06% -2.94% +0.8607 +0.8578
0.6282 NZD 0.6326 -0.70% -1.07% + 0.6344 NZD + 0.6261 NZD
dollars / dollars
Dollar / Norway 10.0680 10.0240 +0.64% +2.79% +10.1150 +10.0450
Euro / Norway 11.3047 11.2868 +0.16% +7.73% +11.3600 +11.2752
Dollar / Sweden 10.2378 10.2468 -0.20% -1.63% +10.2678 +10.1716
Euro / Sweden 11.4894 11.5129 -0.20% + 3.05% +11.5434 +11.4469