Sales Gives Boost to Dollar and Kiwi

Unexpectedly upbeat retail sales data from the U.S. helped to lift the U.S. Dollar against most rivals during Wednesday’s early Asian trading session. Given the improvement in the economic data, there is growing speculation that the Federal Reserve Bank might now decide to rein in its quantitative easing program sooner rather than later, and some analysts speculate that QE tapering could begin as soon as next month. The improvement in retail sales data, which jumped 0.5% to 1.70% against analysts’ expectations of a rise to 1.25%, helped to boost the U.S. Dollar Index to 81.771 .DXY, a gain of 0.5% from late Tuesday trading in New York.

The USD/JPY pair traded at 987.2 Yen, a gain of more than 2 Yen from the 95.92 Yen trough struck on Monday. The EUR/USD pair slipped from Tuesday’s peak of $1.3316 to $1.3261 after the data release, though improvement in Germany’s investor sentiment reading provided the Euro with some support; the EUR/JPY pair traeded at 130.30 Yen, moving away from this week’s trough of 127.95 Yen. The U.S. Dollar did struggle against the Kiwi Dollar given the unexpected 2nd quarter surge of 1.7% in retail sales data in New Zealand; the NZD/USD pair traded at $0.7981, moving steadily higher from the $0.7933 low hit on Tuesday.