By Chuck Mikolajczak
NEW YORK (Reuters) -The dollar rose on Tuesday, on track for a second straight daily gain, after retail sales proved firmer than expected but still soft enough to keep expectations for a Federal Reserve rate cut intact. Book this year.
U.S. retail sales were unchanged in June, exceeding expectations of economists polled by Reuters for a 0.3% decline, as a decline in revenues at car dealerships was offset by strength elsewhere, a show of consumer resilience driving the economic growth prospects for the second quarter. .
“It’s not so much the total number, but the number of ex-cars, which rose significantly more than expected,” said Joseph Trevisani, senior analyst at FX Street in New York.
“Auto sales are being depressed by interest rates, so other than that and of course the housing market, it looks like the consumer is still doing pretty well and we all know that’s the foundation of the American economy.”
Other data showed import prices unchanged in June as a recovery in food prices was offset by lower energy prices, allowing the Fed to cut interest rates this year.
The , which measures the dollar against a basket of currencies, rose 0.07% at 104.31, but was lower than the previous high of 104.51. Against the Japanese yen, the dollar strengthened 0.28% at 158.46.
While markets see only a slim chance of a rate cut of at least 25 basis points (bps) by the Fed at the July meeting, a cut is fully priced in for the September meeting, according to CME’s FedWatch Tool.
Sterling weakened 0.07% to $1.2957 ahead of British inflation data due on Wednesday, while the euro fell 0.03% to $1.0891 ahead of the European Central Bank’s (ECB) policy meeting set for Thursday is planned.
The ECB is largely expected to keep rates steady, with an emphasis on President Christine Lagarde’s comments for clues on the timing of the next rate cut, following a 25 basis point cut in June.
On Monday, Fed Chairman Jerome Powell said the three second-quarter U.S. inflation data “contribute somewhat to confidence” that the pace of price increases will sustainably return to the Fed’s target.
The Canadian dollar strengthened 0.03% against the greenback at 1.37 per dollar, recovering from a decline of as much as 0.21%, after slower-than-expected consumer price growth in June reinforced expectations that a new interest rate cut by the Bank of Canada may be in the offing next week.
Cryptocurrencies rose modestly after rallying in the previous session, along with shares of companies that could benefit from a Trump presidency, after an assassination bid for the Republican candidate raised expectations that he would win the November election.
rose 1.58% to $64,780.28, while ethereum rose 0.83% to $3,463.60.
