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Dollar Rides Strong U.S. Retail Sales, Euro Slump to 2-Week High

2018-6-15 11:17:23Basics of Trading
Dollar Rides Strong U.S. Retail Sales, Euro Slump to 2-Week High

The U.S. dollar rallied to a two-week high against its rivals Thursday as a rout of the euro prompted traders to buy the greenback after the European Central Bank said it would leave interest rates unchanged until the summer of 2019.

The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, rose by 1.05% to 94.54.

The European Central Bank said it would wind up its bond-buying programme in December but tempered expectations for tighter monetary policy measures by conceding that interest rates would be left unchanged until the summer of 2019.

EUR/USD fell 1.26% to $1.1643.

The ECB's somewhat dovish statement paled in comparison to Federal Reserve's, as the U.S. central bank on Wednesday raised its outlook on interest rates for this year to four from a total of three previously.

"While the path is not what we expected, the later start for rates hikes is what we thought was appropriate given the slow progress on inflation," TD Securities said.

The rally in the dollar was also supported by upbeat U.S. economic data, further strengthening the narrative of a strong U.S. economy.

The Commerce Department said on Thursday that retail sales fell 0.8% last month. That confounded economists’ forecast for a rise of just 0.4%. The retail sales control group – which has a larger impact on U.S. GDP – rose 0.5%, topping expectations for a 0.4% rise.

GBP/USD fell 0.52% to $1.3305 despite data showing a sharp rebound in the U.K retail sales.

USD/CAD rose 0.70% to C$1.3077 as falling oil prices weighed on the loonie, supporting the pair.