Currency Market Analysis
Oct 14, 2015 | Currency Market Analysis
The dollar neared one-month lows against the euro and a currency basket as another subpar reading on China’s economy suggested American interest rates would stay put for the foreseeable future. A day after Chinese imports tanked some 20%, inflation cooled to 1.6% in September, down from 2% and below forecasts of 1.8%. The Fed said that weakness abroad led it to keep its key rate unchanged last month, frustrating dollar bulls, several of whom have jumped ship. The dollar is at risk of continuing its descent until the outlook for global growth brightens which could be a while. Sterling soared after U.K. unemployment unexpectedly improved to 5.4%, the lowest in seven years. Skepticism in the Fed raising rates anytime soon buoyed the loonie while back to back days of soggy data from China weighed on the Aussie dollar. A modest gain is on the cards for U.S. retail sales today.
Subdued readings on inflation and America’s main economic growth engine, the consumer, shoved the dollar to fresh session lows. Retail sales rose a mere 0.1% in September, lighter than forecasts of 0.2% while August got revised to zero from 0.2%. So-called core retail spending unexpectedly fell 0.1%. Evidence of global headwinds blowing harder on the U.S. economy all but casts into next year the timing of a Fed rate hike, reducing the dollar’s appeal and boosting the allure of others like the euro, loonie, Aussie and sterling.
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