Dollar Fell Against a Basket of Major Currencies

The U.S. dollar suffered losses against a basket of major currencies on Friday. The greenback fell as global risk appetite rebounded, helping reduce demand for the world’s reserve currency.

Last week, global stocks have rallied as fears about a stagflationary economy declined thanks to better than expected corporate earnings in the U.S. 

U.S. retail sales for September also helped to boost the market sentiment. In September, retail sales rose 0.7%, versus expectations of a 0.2% decline, helped in part by higher prices. 

Sporting goods, music, as well as book stores led the way with a 3.7% increase. Also, general merchandise rose 2% while miscellaneous retailers increased 1.8%. 

Food and beverage spending rose 0.7%, through restaurants and bars saw a gain of just 0.3%. Food and drinking establishment spending increased 29.5% over the past year. 

In September, online sales rose 0.6%. Auto sales increased 0.5% in spite of inventory problems created by a shortage in semiconductors. 

The dollar index, which tracks the greenback against a basket of currencies initially firmed after the retail sales data. Nevertheless, then trended lower and was last down 0.106% at 93.941. 

Dollar, and euro on Friday

The U.S. dollar rallied against its major peers since early September on expectations the Federal Reserve would tighten monetary policy more quickly than previously expected amid an improving economy and surging energy prices.

Minutes of the Federal Reserve’s September meeting confirmed that a tapering of stimulus is all but certain to start in 2021. But policymakers are sharply divided regarding inflation as well as what they should do about it. 

The British pound gained 0.57% to $1.3765, hitting its highest since September 17. The euro dropped 0.3% to $1.1595, after touching $1.1624 on Thursday for the first time since September 4.

The risk-sensitive Australian dollar gained 0.2% to $0.7417. Earlier in the session, it climbed to $0.7439. New Zealand dollar added 0.54% to $0.7068, extending Thursday’s 1% surge.

On Friday, the Japanese yen was the biggest loser. It fell to as low as 114.46 per dollar, its weakest since October 2018. The yen declined as risk appetite also rebounded in Asia. The greenback was last up 0.53% against the yen at 114.28 yen. 

Several days ago, the price of Bitcoin surpassed $60,000 for the first time in six months. It was not far from its record high. 

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