Dollar rises in early trade

16 Feb 2023 , 08:16 AM

The resilience of the world’s largest economy was reinforced by solid U.S. retail sales statistics on Thursday, bolstering the argument that the Federal Reserve still has a ways to go in raising interest rates.

In other news, the Australian dollar dropped as statistics on Thursday revealed that employment unexpectedly dropped for a second consecutive month in January while the unemployment rate shot up to its highest level since last May.

The Australian dollar, which had been somewhat higher the day before the data was released, lost more than 0.5% of its value and hit an intraday low of $0.6868 before last trading at $0.6872.

Meanwhile, the U.S. Commerce Department said on Wednesday that retail sales in the country sharply increased in January after falling for two consecutive months.

The U.S. dollar index rose by 0.07% at 103.87 on Thursday, having gained on the back of the data release and holding onto most of those gains. The previous session saw the greenback reach a nearly six-week high of 104.11 for the year.

The kiwi fell 0.28% to $0.6263 while the euro barely changed at $1.0687.

The retail sales data was released the day after U.S. figures revealed declining but persistent inflation.

Markets currently anticipate a high in US rates above 5.2% by July.

Sterling lost 0.19% to $1.2015 in other currencies, after losing more than 1% the day before.

According to data released on Wednesday, British inflation slowed down more than anticipated in January and there were indications of easing pricing pressure in areas of the economy that the Bank of England was actively monitoring.

This provided more evidence that additional significant BoE interest rate hikes are improbable.

After Kazuo Ueda’s nomination as the incoming governor of the central bank sparked market optimism that the 71-year-old could end Japan’s record-low interest rates sooner than anticipated, the yen increased slightly to 134.07 per dollar.

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