NEW YORK- The US dollar gained against major currencies on Tuesday following better-than-expected retail sales data that showed underlying economic momentum while markets braced for interest rate moves from the Federal Reserve and other central banks.
Commerce Department data on Tuesday showed US retail sales surpassed expectations by jumping 0.7 percent in November, backed by an uptick in motor vehicle and online purchases.
Markets expect the Fed will deliver a 25-basis-point interest rate cut at the end of its two-day policy meeting on Wednesday, with futures implying a nearly 97 percent chance of a cut, according to the CME’s FedWatch tool.
Against the Swiss franc the dollar edged lower by 0.2 percent to 0.89270 in choppy trading, after hovering near its highest level since July. The euro which is heading for a drop of nearly 5 percent against the dollar this year, was down 0.24 percent at $1.048825.
The US dollar index – which tracks the currency against six others – rose 0.17 percent to 106.97, after trading as high as 107.08 on the session.
“The market is trying to debate whether it’s time to fade the dollar, which has had an incredible run this year,” said Marvin Loh, senior global market strategist at State Street in Boston.
“But it seems hard to really push back against US exceptionalism and a stronger dollar going into the new administration, whether we’re talking about a Fed that will probably not seem as dovish as it did in September or the challenges that keep popping up in the emerging and developed markets that make the dollar a safe haven.”
The pound sterling rose against the dollar after data showed British wage growth picked up more strongly than expected in the three months to October. The Bank of England will announce its rate decision on Thursday. The sterling strengthened 0.16 percent to $1.27040.
The yen strengthened against the dollar, as markets have scaled back the chances of a rate hike by the Bank of Japan this week in favor of a move in January. It rose 0.42 percent against the greenback to 153.52 per dollar.
