Dollar Rises Ahead of Retail Sales; sterling gains on GDP growth by Investing.com

Investing.com – The U.S. dollar edged higher on Thursday but remained near seven-month lows after the release of benign inflation data, while the British pound rose after solid growth data.

At 05:45 ET (09:45 GMT), the dollar index, which tracks the greenback against a basket of six other currencies, traded 0.1 percent higher at 102,452, just above levels last seen in January .

Dollar back ahead of retail sales

The U.S. dollar has been on the back foot for most of this week, with data on Wednesday showing moderate growth in July, in line with expectations, and annual inflation growth slowing to below 3 percent for the first time since early 2021.

The numbers were lower than expected earlier in the week and suggest inflation is on a downward trend, which would give the Federal Reserve room to start cutting interest rates.

The next meeting is in September and is expected to cut rates, although debate remains over the size of the initial cut.

The next data point is US retail sales later in the session, and it will get significant attention as consumption accounts for about two-thirds of US economic growth.

The release is expected to show a monthly increase of 0.4%, a slight improvement from the previous month’s flat level.

The Fed has kept its benchmark overnight interest rate in the current range of 5.25%-5.50% since last July after raising its policy rate by 525 basis points from 2022.

Sterling higher after UK growth data

In Europe, it traded 0.2% higher at 1.2845 after data showed Britain grew 0.6% in the second quarter of 2024, building on a swift recovery from 0, 7% in the first quarter of the year.

The UK economy has grown slowly since the COVID-19 pandemic, expanding by just 2.3% between the fourth quarter of 2019 and the second quarter of 2024.

Interest rates were cut for the first time in more than four years in early August, but doubts remain over whether the central bank will agree to further rate cuts this year.

it traded marginally lower at 1.1011 but remained close to the previous session’s high of 1.1047, the highest level this year.

They began cutting interest rates in June and many expect policymakers to agree to another cut in September.

Yen stable after GDP release

In Asia, up 0.1 percent at 147.43, the yen steadied after data showed Japan’s economy grew more than expected in the second quarter, helped by a rebound in private consumption as wages Japanese have grown.

The reading is linked to the Bank of Japan’s view that improving wages will boost the Japanese economy, giving the central bank more room to continue raising interest rates this year.

rose 0.3 percent to 7.1587, the yuan fell as a series of readings presented a mixed picture of the Chinese economy.

China grew more than expected, inspiring some confidence in improving consumer spending and inflation.

But they rose less than expected, as did fixed asset investment. China also unexpectedly rose to 4.2%.

The readings showed that while some policy measures from Beijing helped consumer spending, the overall economy remained under pressure.