Forex Outlook: USD Slightly Down on Retail Sales Data

on Nov 14, 2012

**October Retail Sales Figures Hit USD**

During early morning trading in the US today, the US dollar (USD) showed mixed performance against its major trading peers. The greenback rallied against the broadly weaker yen (JPY), but turned lower against the euro (EUR), as hopes of further aid payments for Greece and Span supported the single currency. Versus the Swiss franc (CHF), the greenback slipped to a 5-day low, while against the British pound (GBP), the USD pared gains. Yet, following the release of disappointing economic data, the greenback took a generally downwards direction.

Official figures in the US showed that retail sales in the country fell for the first time in three months as hurricane Sandy affected most markets. Sales dipped by 0.3 per cent in October, disappointing expectations for a 0.2 per cent decline, while core retail sales, which exclude automobile sales, were flat last month, the Commerce Department said earlier today. Adding to the weight on the US currency, a separate report showed that producer price inflation in the country fell unexpectedly in October, while core prices also dipped.

As a result of this disappointing data, the US dollar is now trading at 1.5874 against the British pound, slightly down from 1.5855 earlier today. The USD posted a further decline against the euro too — from 1.2748 to 1.2726. The greenback is also trading slightly lower versus its Canadian (CAD), Australian (AUD) and New Zealand (NZD) counterparts.

Against the Swiss franc, however, the US dollar is now trading a little higher at 0.9461, compared to its previous rate of 0.9449. Versus the yen, the greenback also stayed in a positive territory, since the Japanese currency remains under selling pressure after Japan’s Prime Minister Yoshihiko Noda said earlier that he is willing to dissolve the lower house of parliament on November 16, setting the stage for elections in December.

**ICE Dollar Index Dips**
The ICE dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, dropped to 80.049, down from 81.097 in late North American action on Tuesday. The next event which may have an effect on the US dollar index is the Federal Open Market Committee (FOMC) minutes release which is scheduled at 19:00 GMT.


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