© Reuters. FILE PHOTO: United States one-dollar bills on a bedside table at the Office of Engraving and Printing in Washington. REUTERS/Gary Cameron
By Karen Brettell
NEW YORK (Reuters) – It rebounded from a one-year low against a basket of currencies on Friday after some components of March retail sales were not as weak as some economists feared, while a key Federal Reserve official He warned that the US central bank would continue to raise interest rates to reduce inflation.
The dollar recovered from an initial slide after data showed US retail sales fell more than expected in March as consumers cut back on purchases of motor vehicles and other big-ticket items.
Core retail sales, which correspond more closely to the consumer spending component of gross domestic product, fell 0.3% last month. However, despite the decline in March, the gains in January and February put consumer spending firmly on track to accelerate in the first quarter.
“Overall it was on the weak side, with the exception of the retail control group, which is super core retail, it was a little less negative than expected and makes you think maybe the market was looking for something a lot more weak”. said Mazen Issa, a senior currency strategist at TD Securities in New York.
Economists noted that against the backdrop of a very strong January, the data still reflects a strong quarter.
“Personal consumption leveled off in February and March, but this followed a big jump in spending momentum in January,” Jefferies money market economist Thomas Simons said in a note. “The bottom line is that the weakness in February and March looks worrisome on its own, but the quarterly averages are much stronger due to the January spending spree.”
The dollar index gained 0.57% on the day to 101.53, after falling to 100.78, the lowest since last April. It remains on track for its fifth consecutive negative week.
The euro fell 0.44% to $1.0999 after touching $1.10755, the highest level since last April. The dollar gained 0.91% against the Japanese yen at 133.78.
Investors are pricing in the likelihood that the Fed will need to cut rates later this year due to an expected slowdown, but the economy remains relatively strong, making trading difficult.
“The general theme is that it is slowing down,” Issa said. “I think what’s being overlooked is that things may take longer to play out, maybe a grind, and the US economy is more resilient than people realize.”
Other data on Friday showed US consumer confidence rose in April, but households expected inflation to pick up over the next 12 months. Production at US factories also fell more than expected in March, but posted a modest gain in the first quarter.
Fed Governor Christopher Waller said Friday that despite a year of aggressive rate hikes, US central bankers have “not made much progress” in bringing inflation back to its target of 2% and need to raise rates even higher.
Meanwhile, Atlanta Fed President Raphael Bostic said an additional quarter percentage point interest rate hike may allow the Fed to finish its tightening cycle with some confidence that inflation will steadily return to his 2% target.
Chicago Fed President Austan Goolsbee also said a US recession is certainly achievable as the Fed’s sharp rate hikes over the last year seep fully into the economy.
Fed funds futures traders are pricing in an 81% probability that the Fed will raise an additional 25 basis points at its May 2-3 meeting.
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Forex Bid Prices at 15:00 (1900 GMT)
Description RIC Last US YTD Closing Percent Change Percent High Bid Low Bid
previous change
Session
Dollar Index 101.5300 100.9700 +0.57% -1.894% +101.7500 +100.7800
Euro/Dollar $1.0999 $1.1048 -0.44% +2.65% +$1.1076 +$1.0973
Dollar/Yen 133.7750 132.5800 +0.91% +2.04% +133.8250 +132.1800
Euro/Yen 147.12 146.43 +0.47% +4.86% +147.1500 +146.2500
Dollar/Switzerland 0.8938 0.8898 +0.47% -3.32% +0.8958 +0.8869
British Pound/Dollar $1.2414 $1.2523 -0.87% +2.65% +$1.2546 +$1.2399
Dollar/Canada 1.3359 1.3339 +0.15% -1.40% +1.3395 +1.3303
Aussie/Dollar $0.6706 $0.6784 -1.16% -1.63% +$0.6806 +$0.6695
Euro/Switzerland 0.9831 0.9827 +0.04% -0.65% +0.9845 +0.9811
Euro/Pound 0.8857 0.8819 +0.43% +0.15% +0.8858 +0.8820
NZ $0.6208 $0.6297 -1.42% -2.24% +$0.6315 +$0.6196
dollar/dollar
Dollar/Norway 10.3730 10.3040 +0.80% +5.83% +10.4070 +10.2890
Euro/Norway 11.4103 11.3850 +0.22% +8.73% +11.4330 +11.3774
Dollar/Sweden 10.3236 10.2632 +0.09% -0.81% +10.3565 +10.2379
Euro/Sweden 11.3550 11.3452 +0.09% +1.85% +11.3755 +11.3265