By Karen Brettell and Gertrude Chavez-Dreyfuss
NEW YORK (Reuters) – The U.S. dollar rose to a new 11-week high on Thursday after data showed U.S. retail sales rose in September, reinforcing expectations that the Federal Reserve will make modest interest rate cuts over the next year and a half as the US dollar The world’s largest economy remained resilient.
Against the Japanese currency, the dollar reached the 150 yen mark for the first time since August 1. It last rose 0.4% to 150.24 yen.
The , a measure of the dollar’s value against six major currencies, was last up 0.3% at 103.81 and rose to 103.87, its highest level since August 2.
“What’s going on today is a continuation of what’s actually been going on all month of October,” said Eugene Epstein, head of structured products, North America at Moneycorp in New York.
“Everyone sees the data coming in stronger than expected, so the dollar… is going higher. The dollar was actually weak when the Fed cut rates by 50 basis points in September. Now that’s easing.”
Thursday’s data showed U.S. retail sales rose 0.4% last month, following an unchanged 0.1% increase in August. Economists polled by Reuters had forecast retail sales to rise 0.3%.
A separate report from the Labor Department shows that initial claims for unemployment benefits fell by 19,000 last week to a seasonally adjusted 241,000, although hurricanes and a months-long strike at Boeing (NYSE:) make it harder to get a clear picture of the labor market. market.
At the same time, the euro fell after the European Central Bank cut interest rates for the third time this year on Thursday. According to the report, inflation in the eurozone is increasingly under control, while the outlook for the region’s economy is deteriorating.
MORE ECB CUTS?
ECB President Christine Lagarde gave no indication of the bank’s future moves in her news conference, but four sources close to the matter told Reuters that a fourth cut in December is likely unless economic or inflation data turns around in the coming weeks.
The euro fell to an 11-week low against the dollar of $1.0811, last changing hands at $1.0826, down 0.3%. The European single currency has fallen in value for four consecutive sessions and fell 2.8% against the dollar in October, on track for the biggest monthly decline since May 2023.
In the United States, US interest rate futures have priced in a 92% probability that the Fed will cut rates by 25 basis points, and an 8% probability that it will pause, meaning the Fed Funds rate is at the target of 4.75 %-5% will stay. range, according to LSEG estimates. Previously, at one of these meetings, they had seen a further cut of 50 basis points as likely.
The futures market also expects a cut of about 44 basis points for 2024, and another cut of 102 basis points next year.
Fed officials, including Fed Chairman Jerome Powell, have balked at the prospect of another 50 basis points of rate cuts since the U.S. central bank surprised some market participants with the bigger-than-usual rate cut in September.
Currency investors are also focused on the upcoming US presidential elections.
Gambling site Polymarket meanwhile shows increasing chances of a victory for Donald Trump in the American presidential elections in November.
“Trump’s chances of winning have increased and that’s why the so-called ‘Trump trade’, which means buying the dollar, is back,” Moneycorp’s Epstein said.
A Trump administration is expected to implement new tax cuts, relax business rules and impose new tariffs, which analysts say could boost growth and inflation, a dollar-positive scenario.
Brad Bechtel, global head of FX at Jefferies in New York, said election-related hedging has helped the dollar’s recent strength, with much of the activity taking place against the Mexican peso and “which will be the two main targets for any form of tariff levy’. -related friction or trade-related friction.”
In other currencies, the Australian dollar rose after Australian employment figures beat expectations for the sixth month in a row in September. The latter was 0.4% higher against the dollar at US$0.6695.
In cryptocurrencies, bitcoin fell 1.1% to $66,849.
Currency
bid
prices
on 17
October
07:47
pm GMT
Description RIC Latest US price YTD High Low
ion Close Chang Pct bid Bid
Previous e
Session
Dollar 103.79 103.54 0.25% 2.39% 103.87 103
index .44
Euro/Dol 1.0827 1.0863 -0.32 -1.9% $1.087 $1.
lar % 4 081
1
Dollar/Y 150.23 149.76 0.37% 6.58% 150.32 149
en .31
Euro/yen 1.0827 162.52 0.09% 4.52% 162.76 161
.86
Dollar/S 0.8664 0.8655 0.13% 2.97% 0.867 0.8
point 631
Sterling 1.301 1.2991 0.17% 2.26% $1.302 $1.
/3 297 dollars
5
Dollar/C 1.3798 1.3752 0.35% 4.1% 1.3801 1.3
anadic 748
Aussie/D 0.6694 0.6666 0.44% -1.8% $0.671 $0.
Olar 666
Euro/Switzerland 0.9381 0.94 -0.2% 1.02% 0.941 0.9
ss 354
Euro/Ste 0.8319 0.8361 -0.5% -4% 0.8369 0.8
Ring 318
New Zealand 0.6059 0.6057 0.06% -4.09% $0.607 0.6
Dollar/D 6 045
olar
Dollar/N 10.9252 10.9141 0.1% 7.8% 10.966 10.
Orway 8 903
1
Euro/Nor 11.8278 11.8553 -0.23 5.38% 11.901 11.
way %82
Dollar/S 10.5399 10.5019 0.36% 4.7% 10.547 10.
Wednesday 4 496
2
Euro/Swedish 11.413 11.4076 0.05% 2.59% 11.439 11.
den 379
(This story has been refiled to remove the strange euro rate in paragraph 10)
