The U.S. retail sales report due today is likely to weigh on the U.S. dollar index movements since it directly reflects the strength of consumer spending in the world’s biggest economy, which can impact the Fed’s outlook.
U.S. retail sales rose 0.1 percent in June after a 0.5 percent increase in May, according to analysts’ forecasts. Also, the core retail sales reading is predicted to show a 0.1 percent surge in June.
The data will be very important since it will be released before official U.S. GDP for the second quarter due next week.
Markets are currently predicting an interest rate cut of 25 basis points by the Fed on July 31, while some analysts believe the Fed would slash the borrowing cost by 50 basis points.
Therefore, any improvement in retail sales could lower the possibility of seeing an interest rate cut by the Fed later this month, especially after the release of strong jobs data for June.
In addition, Fed Chair Jerome Powell will speak at the Bank of France later on Tuesday, where he may focus on key issues such as the U.S. trade war and the global slowdown.
Any dovish remarks about the U.S. economy could put the dollar under pressure, while the opposite is true.
As of 10:06 GMT, the dollar index strengthened to 96.77,
compared to the session’s open at 96.56.