US Dollar Gets a Boost From Positive Economic Data Releases
Aiswarya Gopan • 2 min read
The US dollar is holding strong in early trading on Friday, supported by the retail sales report for August which dealt a positive surprise to markets and sent the currency to the highest levels seen in three weeks against other leading currencies. At the time of writing, the US dollar index DXY is trading around 92.83.
Against expectations for a contraction by 0.8% MoM, retail sales across the US posted a growth of 0.7% during the month of August, raising investor confidence about the US economy despite the spike in cases due to the delta variant. Economists had forecast a contraction in retail sales, anticipating a sharp decline in domestic consumption due to the increased number of COVID-19 cases across the country during the summer holiday month.
In addition to the strong retail sales report, the US dollar also received support from a surge in business sentiment among American manufacturers for September. The Philly Fed manufacturing index surged to 30.7 for the current month from 19.4 in August and came in well above the economists’ forecast which was for a slight dip to 18.9 instead.
Another key data release which further boosted investor confidence in the greenback and the US economy was the latest weekly unemployment claims report which was published in the previous session. The report showed that the number of Americans filing for fresh unemployment claims did post a rise to 332k as was feared, continuing claims fell to 2.665 million for the past week – the lowest levels seen since the pandemic started early last year.
The positive economic data bolstered expectations of a strong recovery in the US economy and raised investor interest in the US dollar once again. The effect of this, however, sent the common currency down to the lowest levels seen since three weeks against the USD while safe haven CHF dropped to a five month low.