The “Donald Trump effect” and retail sales consolidate the global dollar at two-month highs

The “Donald Trump effect” and retail sales consolidate the global dollar at two-month highs

He global dollar remains at its highest levels in more than 60 days driven by the trade policies that the Republican candidate and former president donald trump promised to apply in USA if he wins the November 5 elections against the Democrat Kamala Harriswhile data showed that the retail sales rose in September, reinforcing expectations that the Federal Reserve (Fed) will seek modest interest rate cuts over the next year and a half as the world’s largest economy remains resilient.

He dollar indexwhich compares the greenback to a basket of six currencies of similar global weight, rose 0.3% to 103.81, after reaching 103.87, its highest level since August 2.

The presidential election in USA remains in a very delicate situation and Trump’s tariff, tax and immigration policies are seen as inflationary and, therefore, negative for the treasury bonds and positive for the dollarthe latter at a more than two-month high against its main peers.

“What is happening today is a continuation of what has been happening essentially throughout the month of October,” he said. Eugene Epstein structured product manager for North America at Moneycorp in New York.

“Everyone sees that the data is stronger than expected, so the dollar… is going up. The dollar was really weak before the Fed’s 50 basis point cut in September. Now that is being reversed.”

Retail sales in the United States

Thursday’s data showed that retail sales in the United States they rose 0.4% last month after an unrevised 0.1% increase in August. Economists polled by Reuters had forecast retail sales would rise 0.3%.

A separate report from Department of Labor showed that initial claims for state unemployment benefits fell by 19,000 to a seasonally adjusted 241,000 last week, although hurricanes and a month-long strike in Boeing are making it more difficult to get a clear view of the labor market.

At the same time, the euro fell to an 11-week low against the dollar of $1.0811, and was last trading at $1.0826, down 0.3%. The European single currency has fallen for four consecutive sessions and fell 2.8% against the dollar in the month of October, on track for its biggest monthly drop since May 2023.

This occurs after the European Central Bank will cut interest rates on Thursday for the third time this year. The body said inflation in the euro zone was increasingly under control, while the outlook for the region’s economy has been worsening.

The president of the ECB, Christine Lagarde At his news conference, he gave no clues about the bank’s future moves, but four sources close to the matter told Reuters that a fourth cut is likely in December unless economic or inflation data improve in the coming weeks.

Source: Ambito

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