PE Ledger

Saturday, December 4, 2021

After strong United States retail sales data, the dollar has reached a 16-month high

According to data released last week, the dollar has risen since U.S. consumer prices rose to their highest level since 1990.

On Tuesday, the dollar climbed to a 16-month high as data showed that U.S. consumers ignored rising costs and pushed retail sales higher than predicted last month, while the euro fell amid growth concerns and an increase in COVID-19 cases in Europe.

Retail sales in the United States increased 1.7 per cent in October, beating consensus predictions of 1.4 per cent, owing to Americans starting their holiday shopping early to avoid bare shelves and supply chain interruptions created by the ongoing pandemic.

The dollar ratio was up 0.385 per cent at 95.898 at 3:15 p.m. EST, having previously reached 95.928, its highest level since July 2020.

The dollar has risen since consumer prices in the United States rose to their highest level since 1990 last week, sparking anticipation that the Federal Reserve may hike interest rates sooner than expected.

“If you look at the U.S. markets, there’s a lot more speculation, at least within implied market pricing, that they’ll hike many times next year,” said Mazen Issa, senior F.X. analyst at T.D. Securities. “The dam has just broken with last week’s US CPI report, and the dollar and the F.X. complex are surely driving.”

He stated, “Today’s retail sales report simply adds fuel to the flames.”

The euro continued to fall against the dollar, the last trading at $1.13175, down 0.43 per cent. Earlier in the afternoon, the euro fell to $1.1315, its lowest level since July 2020.

President of the(ECB) European Central Bank Christine Lagarde cautioned that tightening monetary policy now to fight inflation risks suffocating the euro zone’s recovery. These comments were interpreted as a blow to calls and market bets for tighter policy.

COVID-19 is also increasing in Europe, prompting some governments to consider lockdowns again, although the virus’s spread in the U.S. appears to have stabilised, for the time being, he said.

As a result, the market is growing increasingly concerned about the euro, according to Gittler.

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