The U.S. dollar experienced a slight decline on Friday, losing some of the previous day’s significant gains ahead of the highly anticipated Jackson Hole symposium. This shift occurred after strong retail sales data helped ease recession fears in the U.S. At 05:15 ET (09:15 GMT), the Dollar Index, which tracks the greenback against a basket of six other currencies, fell by 0.1% to 102.725. This followed a notable increase of 0.4% the previous day, marking its most substantial one-day gain in four weeks.
This week’s benign inflation data has suggested that the U.S. Federal Reserve might start cutting interest rates at its September meeting. However, the better-than-expected retail sales report from July has alleviated concerns that the central bank may need to cut rates aggressively to avert a recession. The data has led investors to anticipate a 25-basis-point rate cut by the Federal Reserve on September 18. Yet, numerous data points will influence the Fed’s decision, with next week’s Federal Reserve annual Jackson Hole symposium being a key event.
Across the Atlantic, GBP/USD rose by 0.3% to 1.2891, following data showing a 0.5% increase in British retail sales for July. This increase came after a 0.9% decline in June. Despite the Bank of England cutting interest rates for the first time in over four years earlier this month, uncertainties linger about further rate cuts this year. EUR/USD also edged higher, trading at 1.0981 after a 0.4% drop the day before, but it remained close to its peak for the week.
In Asia, USD/JPY fell by 0.4% to 148.75, although the yen’s outlook remains strong. Japan’s gross domestic product data this week indicated that the economy is gaining momentum, driven by rising wages. This economic strength may provide the Bank of Japan with more flexibility to raise interest rates further. Meanwhile, USD/CNY dropped by 0.1% to 7.1673, with the yuan slightly higher, despite mixed economic signals from China.
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The U.S. dollar softens as retail sales data and the upcoming Jackson Hole symposium influence market sentiment.
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