U.S. dollar rebounded Thursday. What about other currencies?
The dollar rallied on Thursday, recovering some of yesterday’s losses as traders assessed mixed U.S. economic data. On the other hand, the sterling tumbled down as the U.K. authorities released their latest budget plan.
The U.S. currency has traded in the red in recent weeks. Federal Reserve officials’ comments, along with fresh inflation data, suggested that the central bank might slow the pace of its aggressive interest rate hikes soon. However, on Wednesday, U.S. retail sales data for October came in much stronger than analysts expected. That news supported the greenback today.
Consequently, the dollar index surged forward by 0.66% to 106.98 against the basket of six major currencies. During the previous weeks, the index has shaved off more than 6% since skyrocketing to a 20-year peak in September. Despite that, it is still 11% higher for the year thus far.
On Thursday, the euro plummeted by 0.63% versus the U.S. dollar. It exchanged hands at $1.033 at last after soaring to $1.048 on Tuesday, hitting its highest level since July.
Commonwealth Bank of Australia currency strategist Kim Mundy noted that forex markets have prepared for the Federal Reserve to change the course. However, the U.S. retail sales data challenges those expectations.
The greenback is consolidating as traders try to work out the direction of the U.S. economy – stated Simon Harvey, the senior FX analyst at Monex Europe. He also added that the positive consumption data suggests the economy isn’t experiencing drawbacks yet. But it’s unclear at this point whether that assessment will boost riskier assets or support the dollar.
How is the British Pound faring?
The sterling declined slightly today as UK finance minister Jeremy Hunt issued tighter public spending and tax increases. He is trying to bring down inflation and restore the country’s economic reputation.
The Pound exchanged hands lower by 0.98% to $1.179 at last. The euro also climbed up by 0.38% versus the sterling at 87.59 pence.
