The US Dollar Index edged away from a 1-month trough after the Chinese government alleviated investors’ concerns that a currency war was brewing. The Euro had earlier been driven to a 1-month peak against the Dollar but some gains were given back during the European session. Earlier this week, in two separate and consecutive incidents, Beijing had lowered its guidance for the Yuan versus the greenback. Many saw that as the government’s attempt to gain some competitive advantage by devaluing the Yuan. While the Yuan did weaken slightly today, the People’s Bank of China said that further depreciation had no basis.
As reported at 11:24 am (BDT) in London, the US Dollar Index was trading higher at 96.5590 .DXY, a gain of 0.31%; the Index is off its 1-month trough at 95.926 .DXY. The EUR/USD was down at $1.1120, moving away from the session peak of $1.1188.
US Retail Sales in Focus
Ahead today, after a volatile week for the Dollar thanks to the Chinese move, markets will focus on the release of retail sales figures. The consumer segment drives the US economy, and a strong report today could help boost expectations that the Federal Reserve Bank has not now put on the back burner the timing for a rate hike. Sentiment had shifted to a likely postponement of a rate hike given the Chinese currency intervention and overall general uneasiness over the global economy.
