The dollar was close to its best result in several weeks after better-than-expected retail sales numbers in the U.S. boosted bets on the strength of the country’s economy and earlier monetary policy tightening. Better-than-expected U.S. retail sales revive expectations for an early tapering of its asset purchases by the central bank.
The single currency pulled itself into positive territory by the European mid-morning. However, at $1.1783 the euro remained close to a three-week low.
U.S. retail sales rose in August, data showed this week. U.S. retail sales in August rose 0.7% from the previous month despite expectations of a 0.8% fall. Hopefully, a business sentiment survey also showed a big improvement.
In Several hours, the University of Michigan will release its consumer sentiment index.
The dollar index, which tracks the greenback against a basket of currencies, last stood at 92.818. But the index was close to Thursday’s three-week high of 92.965.
Dollar, yuan, pound, and Swiss franc
On Friday, currency markets were generally quiet. Traders were reluctant to take on new positions ahead of several important central bank meetings next week including the Fed, the Bank of Japan as well as the Bank of England.
The Swiss franc was in a stable position after hitting a five-month low versus the greenback of 0.9280 francs. The dollar gained 0.2% to 109.99 Japanese yen. One day earlier, it rose 0.34% to rise off from Wednesday’s six-week low of 109.11.
The country’s currency showed a limited reaction to the ruling Liberal Democratic Party’s leadership race. The party’s parliamentary dominance means LDP’s new leader will become prime minister.
Another major currency, the Chinese yuan recovered slightly after Thursday’s fall.
The offshore yuan traded at 6.4526 to the greenback. Concerns about China’s real estate sector affected the offshore yuan. The property giant China Evergrande could default on its coupon payment next week.
One of the major property developer’s case follows a series of regulatory clampdowns in China that reduced investor confidence in the local stock market.
But, on a trade-weighted basis, the yuan was close to its highest point in several years. That applies both to the onshore and offshore market.
The pound fell 0.1% to $1.3784 as U.K. retail sales failed to meet expectations. Still, with investors bringing forward forecasts for a Bank of England interest rate hike to mid-2022, the pound remains supported and is near one-month highs.