Slowdown In U.S. Retail Sales Growth Pulls Down Dollar

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The U.S. dollar slipped against its major counterparts in the European session on Friday, after the nation’s retail sales increased less than expected in July due to the economic blow of COVID-19.

Data from the Commerce Department showed that retail sales advanced by 1.2 percent in July after soaring by an upwardly revised 8.4 percent in June.

Economists had expected retail sales to jump by 1.9 percent compared to the 7.5 percent spike originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales surged up by 1.9 percent in July after skyrocketing by 8.3 percent in June. Ex-auto sales were expected to increase by 1.3 percent.

Data from the Labor Department showed a jump in U.S. industrial production in the month of July.

The Fed said industrial production surged up by 3.0 percent in July after soaring by an upwardly revised 5.7 percent in June.

Economists had expected production to jump by 3.0 percent compared to the 5.4 percent spike originally reported for the previous month.

The political stalemate between congressional Democrats and the White House over additional U.S. stimulus package also weighed on investors’ sentiment.

Stimulus talks stalled as a pivotal call between House Speaker Pelosi and Treasury Secretary Mnuchin yielded no results.

The two sides remained at odds over enhanced jobless benefits and expanding mail-in voting, among other issues.

The currency held steady against its key counterparts in the previous session.

The USD/JPY pair shed 0.3 percent, touching a 2-day low of 106.56. At yesterday’s trading close, the pair was quoted at 106.92. The greenback is seen finding support around the 104.00 mark.

Data from the Ministry of Economy, Trade and Industry showed that Japan’s tertiary industry activity grew for the first time in five months in June.

Tertiary industry activity rose 7.9 percent month-on-month in June, after a 2.9 percent fall in May.

After recording a 2-day high of 0.9123 at 5:30 am ET, the greenback turned lower against the franc and pulled back to 0.9092. Next near term support for the greenback is likely seen around the 0.88 level.

Data from the Federal Statistical Office showed that Switzerland’s producer and import prices declined in July.

Producer and import prices fell 3.3 percent year-on-year in July.

Extending early decline, the greenback fell by 0.6 percent to reach a 1-week low of 1.3142 against the pound. The pair had closed Thursday’s deals at 1.3067. The greenback may face support around the 1.34 region, if it falls again.

The greenback was down by 0.4 percent at 1.1835 against the euro, after having advanced to 1.1782 at 5:30 am ET. The pair was worth 1.1813 when it closed deals yesterday. Further fall in the greenback may find support around the 1.20 mark.

Flash estimate from Eurostat showed that the euro area economy contracted at a record pace in the second quarter, as initially estimated, due to the containment measures taken by member countries to control the spread of the coronavirus.

Gross domestic product fell 12.1 percent sequentially in the second quarter, following a 3.6 percent drop in the first quarter. This was the sharpest decline seen since the series began in 1995.

The greenback eased to 0.6551 against the kiwi, losing 0.4 percent from a 2-day high of 0.6527 seen at 11:45 pm ET. The greenback is likely to challenge support near the 0.68 mark.

The U.S. currency remained lower against the aussie, with the pair trading at 0.7163. This marked a 0.4 percent fall from a 2-day high of 0.7132 set in the Asian session. The greenback was worth 0.7148 per aussie at Thursday’s New York session close. Should the greenback falls further, it is likely to test support around the 0.73 region.

On the flip side, the greenback was steady against the loonie, following an advance to 1.3254 at 5:45 am ET. The greenback was trading at 1.3222 a loonie at yesterday’s close.


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