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Forex News: Dollar Mixed After U.S. Retail Sales Data

Dollar Mixed After U.S. Retail Sales Data

12/16/2020 - 09:31:00 (RTTNews)

(RTTNews) - The U.S. dollar showed mixed trading against its major counterparts in the European session on Wednesday, after a data showed that the nation's retail sales slumped more than expected in November due to the business restrictions in the wake of a surge in coronavirus cases.

Data from the Commerce Department showed that retail sales tumbled by 1.1 percent in November following a revised 0.1 percent dip in October.

Economists had expected retail sales to slip by 0.3 percent compared to the 0.3 percent increase originally reported for the previous month.

Excluding a decrease in sales by motor vehicle and parts dealers, retail sales still fell by 0.9 percent in November. Ex-auto sales were expected to inch up by 0.1 percent.

The Federal Reserve will deliver its interest rate decision at 2:00 pm ET. The Fed is expected to keep the key overnight interest rate near zero and the QE program at $120 billion a month.

Traders await whether the Fed will adjust its forward guidance about the asset purchase program.

On the stimulus front, House Speaker Nancy Pelosi held discussions with Senate Majority Leader Mitch McConnell, Senate Minority Leader Chuck Schumer and House Minority Leader Kevin McCarthy on Tuesday to break the impasse on the coronavirus relief package.

After the meeting, McConnell struck an upbeat tone, saying that significant progress has been made on talks over the aid package.

Congressional leaders are planning to reach a deal before the end of the year.

The greenback depreciated against its major counterparts in the Asian session as optimism about a U.S. stimulus package and progress in the Covid vaccine rollout lifted risk sentiment.

The greenback recovered to 0.8856 against the franc, from near a 6-year low of 0.8826 seen at 3:45 am ET. At Tuesday's close, the pair was valued at 0.8855. The greenback may face resistance around the 0.90 level.

The greenback remained lower against the pound, at a 2-1/2-year low of 1.3555. The pound-greenback pair had finished yesterday's trading session at 1.3451.

Data from the Office for National Statistics showed that U.K. consumer price inflation slowed to a three-month low in November.

Inflation weakened to 0.3 percent from 0.7 percent in October. The rate was well below the economists' forecast of 0.6 percent.

The greenback held steady against the euro, after having dropped to a 2-1/2-year low of 1.2212 in early deals. The pair had closed Tuesday's deals at 1.2150.

Flash survey results from IHS Markit showed that the euro area private sector moved close to stabilization in December as stronger manufacturing output growth helped to counter a further drop in service sector activity.

The composite output index advanced more-than-expected to 49.8 in December from 45.3 in the previous month. The expected level was 45.8.

After falling to more than a 5-week low of 103.26 at 5:00 am ET, the greenback rebounded slightly to 103.57 against the yen. The pair was worth 103.65 when it ended deals on Tuesday. On the upside, 106.00 is likely seen as its next resistance level.

Data from the Ministry of Finance showed that Japan posted a merchandise trade surplus of 366.8 billion yen in November.

That was well shy of expectations for a surplus of 529.8 billion yen and down sharply from 872.9 billion yen in October.

U.S. business inventories data for October and NAHB housing market index for December will be released shortly.

At 2:00 pm ET, the Fed announces its decision on interest rate. Economists widely expect the federal funds rate to be kept at 0 - 0.25 percent.

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