The dollar holds its recent gains as consumer spending continues to increase

Tom Tong14/Mar/2013Currency Updates

USD

The Dollar moved higher again today, extending the already massive gains over the last month.US consumers shrugged off higher taxes to boost retail spending by 1.1% in February from the month before or by 1% when excluding the auto sector. It was the biggest rise in five months. About half the increase was due to higher petrol prices, but consumers also increased spending on a range of other goods, from cars to clothing to home ware and furniture. In the past 12 months, retail sales are up 4.6%, slightly more than double the rate of consumer inflation showing a good economic growth. To summarize, the dollar will not be losing its recent streak of gains very soon. Today we have the USD Initial Jobless Claims & PPI Index which will give give us a indication whether US labour market will continue to recover.

EUR

The Euro has lost recent gains against the dollar tot he relief of the ECB policy makers as recent gains were worrying with regards to exports. The sentiment surrounding the euro is now dominated by the pessimism after strong US data dragged the cross to fresh 2013 lows on Wednesday.Next on tap will be the Spanish retail sales, preceding the EMU unemployment rate. Data to look out for today is : CHF Rate decision and EUR Employment Change.

GBP

The pound gained for a second day against the dollar as a Bank of England report said public finances will benefit by a net 17 billion pounds ($25 billion) from transfers from the central bank’s asset-purchases program. Sterling has weakened 5.9 percent this year, the second- worst performer after the yen among 10 developed-market currencies tracked by Bloomberg Correlation-Weighted Indexes.
Talks over negative interest have resurface again as the UK may fall in a triple dip recession. The monetary policy have decided against it till now because of worries about implication for savers, the risk of driving deposits away from institutions and impact on building societies which rely on deposits than markets for funding.

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Written by Tom Tong

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