EUR/USD Weakness on 'Dovish' ECB Remarks Boosts Dollar
The dollar rose on Thursday against a basket of major currencies, buoyed by a slump in the euro on dovish European Central Bank remarks, while bullish retail sales data pointing to stronger US economic growth lifted sentiment.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, fell 0.25% to 93.62.
The Commerce Department said on Thursday that retail sales rose 0.8% last month. that was above economists’ forecast of a 0.3%.
The upbeat retail sales data suggested that consumer spending would continue to be robust, lifting expectation for a solid fourth quarter of US economic growth.
"Consumer spending is expected to play a larger role in driving fourth quarter growth," CIBC said. “Our 2.7% forecast might be low as growth looks more like 3%."
The upbeat data came as the euro weakness provided additional support for the greenback after the European Central Bank (ECB) left rates unchanged, while ECB president Mario Draghi’s remarks were interpreted as “dovish”, easing monetary policy tightening expectations.
"Domestic price pressures remain muted overall and have yet to show convincing signs of a sustained upward trend,” Draghi said in a press conference on Thursday, adding that an “ample degree” of stimulus is still needed.
GBP/USD rose 0.18% to $1.13441 after the Bank of England policymakers voted to leave interest rates unchanged, warning that Brexit remained a challenge for monetary policy.