Dollar bounces as US retail sales beat expectations
By Karen Brettell and Samuel Indyk
NEW YORK/LONDON (Reuters) — The dollar gained on Tuesday after data showed that U.S. retail sales rose more than expected in September, with investors also focused on a busy week of speeches by Federal Reserve officials.
Retail sales rose 0.7% last month as households boosted purchases of motor vehicles and spent more at restaurants and bars.
“The whole idea of the U.S. economy slowing down in Q4 was that the consumer would pull back, and they ended Q3 on a very strong note,” said Marc Chandler, chief market strategist at Bannockburn Global Forex.
That said, “we haven’t seen as big of a rally in the dollar as one might have expected on such a strong retail sales number,” he added.
The dollar index was last up 0.16% at 106.40. It is holding below the 107.34 level reached on Oct. 3, the highest since November 2022.
The euro fell 0.11% to $1.0548. It is up from $1.0448 on Oct. 3, the lowest since December 2022.
Investors are focused on speeches this week by Fed officials, including Fed Chair Jerome Powell on Thursday, for further clues about interest rate policy.
The officials will enter a blackout period on Oct. 21 before the Fed’s Oct. 31 – Nov. 1 meeting.
Traders are evaluating whether the U.S. central bank may hike rates again as it battles to bring inflation closer to its 2% annual target.
Fed funds futures traders are pricing in a 43% chance of an additional interest rate hike this year, but only 12% odds of a rate increase next month, according to the CME Group's (NASDAQ:CME) FedWatch Tool.
The yen briefly surged but quickly trimmed gains after a media report that the Bank of Japan was considering raising its core CPI forecast for the 2023 and 2024 fiscal years but maintaining
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