The U.S. Dollar reversed direction and moved higher against both the Australian Dollar and the Japanese Yen after the release of retail sales date from the U.S. gave dollar bulls a reason to celebrate. After last Friday’s disappointing labor data, markets were eager for any upbeat economic information and the news that retail sales beat expectations in December was sufficiently good enough to stop the dollar’s recent slide.
As reported at 10:33 a.m. (JST) in Tokyo, the USD/JPY pair was trading at 104.31 Yen, a slight gain which added to yesterday’s 1% rally for the greenback. The EUR/USD was steady at $1.3637, losing 0.3% from late trading in New York and moving away from the recently struck 2-week peak. The AUD/USD was trading lower at $0.8965, losing almost 1% versus the U.S. Dollar; upcoming economic data from China, however, could make the Aussie volatile.
Fed Tapering Talk Resumes
Moreover, though the Fed’s monetary policy is still in some question, given the recent dismal labor report and the Fed’s dual mandate, recent commentary from two new hawkish voting members who recently said that the Fed’s QE scheme needs to come to an end soon also helped to prop up the greenback. Speculation that the Fed might consider a mid-2015 interest rate hike has now been revived as a result of the retail sales news and given the Fed’s new FOMC makeup.