# Dollar index jumps after U.S. retail sales show surprise rebound
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-09-16
Category: TRADING
Category URL: https://financedigest.com/category/trading
Meta Title: Dollar Hits Near 3-Week High on Strong U.S. Retail Sales
Meta Description: Boosted by unexpectedly strong retail sales data, the dollar surged to a near 3-week high against a basket of currencies on Thursday. Find out more here.
URL: https://financedigest.com/dollar-index-jumps-after-u-s-retail-sales-show-surprise-reboundhtml

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By Caroline Valetkevitch

NEW YORK (Reuters) – The dollar hit a near 3-week high against a basket of currencies on Thursday after data showed U.S. [retail sales](https://www.financedigest.com/uk-retailers-turn-positive-on-sales-hopes-after-bleak-winter.html "UK retailers turn positive on sales hopes after bleak winter") unexpectedly increased in August, easing some concerns about a sharp slowdown in economic growth.

The dollar index, which measures the U.S. currency against six others, added to gains following the [report and was last](https://www.financedigest.com/the-last-mile-of-statutory-reporting-is-absolutely-crucial-heres-how-one-global-company-does-it-with-onesource.html "The last mile of statutory reporting is absolutely crucial. Here’s how one global company does it with ONESOURCE") up 0.5% at 92.923. It [hit its highest](https://www.financedigest.com/uk-inflation-hits-40-year-record-highest-in-g7.html "UK inflation hits 40-year record, highest in G7") level since Aug. 27.

Retail [sales rose 0.7% last month](https://www.financedigest.com/uk-new-car-sales-rise-17-in-march-best-ever-month-for-evs.html "UK new car sales rise 17% in March; best ever month for EVs"), boosted in part by back-to-school shopping and child tax credit payments, while data for July was revised down.

A [separate report](https://www.financedigest.com/advanced-real-time-reporting-separates-the-serious-players-from-the-casual-dabblers.html "Advanced real-time reporting separates the serious players from the casual dabblers") showed U.S. initial [claims for state unemployment benefits](https://www.financedigest.com/why-you-might-want-to-wait-until-age-70-to-claim-social-security-benefits.html "Why You Might Want to Wait Until Age 70 to Claim Social Security Benefits") increased 20,000 to a seasonally adjusted 332,000 for the week ended Sept. 11. Economists had [forecast 330,000 applications for the latest](https://www.financedigest.com/e-commerce-report-the-latest-trends-and-forecasts.html "e-Commerce Report: The latest trends and forecasts") week.

If you look at the [retail sales](https://www.financedigest.com/valentines-day-spending-boosts-british-retail-sales-in-february-brc.html "Valentine’s Day spending boosts British retail sales in February – BRC") number, it’s quite constructive even with the revisions, so we are seeing the dollar benefit from that, particularly against the funding currencies like the euro, Swiss and the yen,” said Bipan Rai, North American head of FX strategy for CIBC Capital Markets in Toronto.

The news could bolster investor [expectations for next week’s Federal Reserve policy meeting](https://www.financedigest.com/institutions-need-to-consider-spreadsheet-management-to-meet-the-pras-latest-stress-testingexpectations.html "Institutions Need to Consider Spreadsheet Management to Meet the PRA’s Latest Stress Testing Expectations") and how soon the U.S [central bank](https://www.financedigest.com/dollar-skulks-at-eight-month-low-central-bank-meetings-in-focus.html "Dollar skulks at eight-month low, central bank meetings in focus") will start to taper stimulus.

It [feels like whatever lingering concerns there were with the underlying economy](https://www.financedigest.com/whos-feeling-optimistic-about-the-global-economy-in-2020.html "Who’s feeling optimistic about the global economy in 2020?") … that was kind of washed away a little bit. So as we move towards the Fed next week, the evidence backs up the idea that we’re going to get a taper [signal from the Fed](https://www.financedigest.com/dollar-slides-from-near-two-year-high-amid-hawkish-signals-from-fed.html "Dollar slides from near two-year high amid hawkish signals from Fed") at the meeting,” he said.

On Tuesday, the [dollar index fell to a one-week low](https://www.financedigest.com/euro-rises-after-spanish-cpi-dollar-slips-towards-8-mth-low.html "Euro rises after Spanish CPI, dollar slips towards 8-mth low") of 92.321 after a softer-than-expected inflation report. Its low for the month was 91.941, on Sept. 3, when payrolls data disappointed.

[Investors are looking for clarity on the outlook for both tapering and interest rates at the Fed’s](https://www.financedigest.com/oil-steadies-after-dipping-on-china-outlook-investors-await-fed-clues.html "Oil steadies after dipping on China outlook; investors await Fed clues") two-day policy meeting that ends next Wednesday.

Tapering typically lifts the [dollar as it suggests the Fed](https://www.financedigest.com/dollar-pauses-for-breath-as-fed-swings-into-focus.html "Dollar pauses for breath as Fed swings into focus") is one step closer to tighter monetary policy.

It also means the central [bank will be buying fewer debt](https://www.financedigest.com/christmas-debt-hangovers-how-banks-can-help-customers.html "CHRISTMAS DEBT HANGOVERS: HOW BANKS CAN HELP CUSTOMERS") assets, in effect reducing the amount of dollars in circulation, which in turn lifts the currency’s value.

The [dollar also gained](https://www.financedigest.com/dollar-trims-gains-vs-euro-after-u-s-inflation-data.html "Dollar trims gains vs euro after U.S. inflation data") 0.3% to 109.68 yen, after sliding to a six-week low of 109.110 in the previous session.

The euro was 0.5% lower at $1.1758.

The Swiss franc also fell against the dollar and was last at 0.9260 francs.

Elsewhere, the [Australian dollar](https://www.financedigest.com/asian-stocks-make-7-month-highs-australian-dollar-gains-on-hot-inflation.html "Asian stocks make 7-month highs, Australian dollar gains on hot inflation") was down 0.7% at $0.7285.

Earlier, [data showed the country’s jobless rate](https://www.financedigest.com/dollar-advances-as-strong-u-s-data-backs-higher-rates-backdrop.html "Dollar advances as strong U.S. data backs higher rates backdrop") unexpectedly fell to 4.5%, but the statistics bureau said the change reflected a drop in the participation rate rather than a strengthening of the labor market.

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Currency bid prices at 10:35AM (1435 GMT)

Description RIC Last U.S. Close Pct Change YTD Pct High Bid Low Bid

Previous Change

Session

Dollar index

92.9230 92.4620 +0.51% 3.270% +92.9650 +92.4570

Euro/Dollar

$1.1758 $1.1816 -0.49% -3.76% +$1.1820 +$1.1751

Dollar/Yen

109.6800 109.3800 +0.28% +6.16% +109.8250 +109.2100

Euro/Yen

128.95 129.20 -0.19% +1.60% +129.3400 +128.6100

Dollar/Swiss

0.9260 0.9197 +0.69% +4.67% +0.9271 +0.9195

Sterling/Dollar

$1.3768 $1.3843 -0.54% +0.78% +$1.3852 +$1.3765

Dollar/Canadian

1.2687 1.2624 +0.52% -0.35% +1.2699 +1.2618

Aussie/Dollar

$0.7285 $0.7334 -0.67% -5.30% +$0.7345 +$0.7279

Euro/Swiss

1.0888 1.0865 +0.21% +0.75% +1.0895 +1.0858

Euro/Sterling

0.8537 0.8537 +0.00% -4.48% +0.8543 +0.8501

NZ

Dollar/Dollar $0.7067 $0.7110 -0.63% -1.62% +$0.7140 +$0.7063

Dollar/Norway

8.6360 8.5755 +0.78% +0.65% +8.6470 +8.5725

Euro/Norway

10.1562 10.1265 +0.29% -2.97% +10.1679 +10.1130

Dollar/Sweden

8.6424 8.5694 +0.24% +5.44% +8.6512 +8.5700

Euro/Sweden

10.1622 10.1380 +0.24% +0.86% +10.1710 +10.1360

(Reporting by Caroline Valetkevitch; Additional reporting by Ritvik Carvalho in London and Kevin Buckland in Tokyo; Editing by Alexander Smith and Mark Potter)


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