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.
