By Chibuike Oguh
NEW YORK (Reuters) – The U.S. dollar strengthened against most major currencies on Tuesday after better-than-expected retail sales data that appeared to support a less hawkish stance from the Federal Reserve, which is widely expected to make its first will implement interest rate cuts in 2020. more than four years.
Commerce Department data showed on Tuesday that US retail sales unexpectedly rose 0.1% in August, indicating the economy remained on solid footing for much of the third quarter.
The Fed’s Federal Open Market Committee will announce its interest rate decision at the end of its meeting on Wednesday, after which Chairman Jerome Powell will hold a news conference. The last Fed rate cut took place in March 2020, during the COVID-19 pandemic.
“I think all markets right now are hostage to this FOMC meeting tomorrow,” said Marvin Loh, senior global market strategist at State Street (NYSE:) in Boston.
“Retail sales were fine. It certainly doesn’t prove there should be an immediate rush to make super-sized cuts, and it would be somewhat unprecedented if the Fed really panics with rate cuts given the current state of the market .”
Against the yen, the dollar rose 0.87% to 141.830, after initially weakening on retail sales.
The euro fell 0.10% to $1.112125, not far from the year’s high of $1.1201. Against the Swiss franc, the dollar rose 0.15% to 0.8460.
The , which measures the dollar against a basket of currencies including the yen and euro, gained 0.199% to 100.90.
Fed Funds futures show the probability of a 50 basis point rate cut was 63%, up from 30% a week ago, while the probability of a 25 basis point rate cut was 37%. The odds have narrowed sharply after media reports revived the prospect of a more aggressive easing.
Other economic data on Wednesday appeared to provide support for the Fed to be less aggressive in cutting rates. U.S. business inventories, a key component of gross domestic product, posted a better-than-expected 0.3% increase in July, while factory output recovered in August.
“Overall, the market is pricing in numerous rate cuts in the coming months and there are voices suggesting the market may have gotten ahead of itself,” said Axel Merk, president and chief investment officer at Merk Investments in Pal Alto. California.
The Bank of Japan is expected to keep policy steady on Friday but signal that further rate hikes are on the way, likely making its next meeting a live one in October.
The Bank of England is also expected to keep interest rates at 5% at Thursday’s meeting, although markets have priced in a nearly 36% chance of another cut.
Sterling – the best-performing G10 currency this year with a rise of 3.41% against the dollar – has risen on signs of resilience in the UK economy and persistent inflation. It was last down 0.37% at $1.31665.
Chinese markets are closed until Wednesday for the Mid-Autumn Festival break, although the yuan rose 0.16% to 7.1090 in offshore trading.
The Canadian dollar rose 0.04% to $1.35935. The Australian and New Zealand dollars bought $0.67595 and $0.61900 respectively.
In cryptocurrencies, bitcoin gained 5.00% to $60,544.00. rose 3.29% to $2,349.00.
Currency bid prices on 17
September 18:54 GMT
Description RIC Last US Close Previous session Pct Change YTD Pct High bid Low bid
Dollar index 100.91 100.7 0.21% -0.45% 101 100.56
Euro/dollar 1.1121 1.1133 -0.11% 0.75% $1.1146 $1.1111
Dollar/yen 141.87 140.59 0.91% 0.59% 141.93 140.36
Euro/yen 1.1121 156.53 0.79% 1.38% 157.87 156.06
Dollar/Swiss 0.8461 0.8449 0.15% 0.53% 0.8478 0.843
Sterling/Dollar 1.3163 1.3216 -0.4% 3.44% $1.3229 $1.3147
Dollar/Canadian 1.3593 1.3587 0.06% 2.55% 1.3617 1.3581
Aussie/Dollar 0.6756 0.6752 0.07% -0.9% $0.6769 $0.6742
Euro/Swiss 0.9409 0.9403 0.06% 1.32% 0.9422 0.9383
Euro/British Pound 0.8447 0.8423 0.28% -2.55% 0.8454 0.8419
New Zealand dollar/dollar 0.6186 0.6201 -0.21% -2.07% $0.6211 0.6179
Dollar/Norway 10.5965 10.5865 0.09% 4.55% 10.623 10.5601
Euro/Norway 11.7859 11.786 0% 5.01% 11.8099 11.7553
Dollar/Sweden 10.1823 10.1687 0.13% 1.15% 10.2075 10.1504
Euro/Sweden 11.3252 11.322 0.03% 1.8% 11.3465 11.306
