Dollar Rises in Response to Impressive Growth in Retail Sales

The dollar surges when data indicates a big increase in retail sales, despite expectations of a decline. As the world emerges from the epidemic with rapid vaccinations, the data also inspires hope that this is just the beginning of a comeback in consumer demand. The Canadian Dollar is the second strongest currency for the day. The Euro and Swiss Franc, on the other hand, are in severe decline.

In August, US retail sales increased 0.7 percent to USD 618.7 billion, much-exceeding expectations of a -0.7 percent decrease. Excluding autos, non-auto sales increased 1.80% mom, compared to a -0.1% fall expected. Sales of non-gasoline products increased by 0.8 percent. Sales of non-auto, non-gasoline products increased by 2.0 percent mum. Total sales increased 16.3% from June to August 2021, compared to the same period the previous year.

On Thursday, DXY sheds its bearish price action from Wednesday and flirts with the 92.80 marks. As a result, the index is attempting to break out of its consolidative range, with the weekly high at 92.88 serving as an immediate roadblock ahead of the round level at 93.00.

The greenback gained strength versus its rivals as a result of the early market reaction, and the US Dollar Index was last seen trading at a new daily high of 92.82, up 0.4 percent on the day. The pre-Jackson Hole high, at 93.18, is located further north from this level. In the meantime, the positive stance on the dollar remains steady while trading above the 200-day SMA, which is currently at 91.40.

Dollar Growth Boosted by Retail Sales

Following the news, the buying of the US dollar increased. In August, US retail sales surpassed expectations, rising 0.7 percent on a month-over-month basis. Furthermore, sales excluding automobiles grew at a considerably faster rate of 1.8 percent, demonstrating consumer confidence. Furthermore, the Philadelphia Fed Manufacturing Index increased to 30.7 in September from 19.4 the prior month.

On Thursday, the pair saw some dip buying near 109.20, building on the previous day’s small recovery from near one-month lows amid rising US dollar demand. For the time being, the USD/JPY pair appears to have halted this week’s softer US CPI-inspired retracement decline, snapping a two-day losing run.

In response to mainly bullish US economic data, the USD/JPY pair saw an aggressive short-covering move throughout the early North American session, jumping to the 109.80-85 level.