Forex - Dollar advances in quiet trading, awaits retail sales data

Written By Unknown on Selasa, 13 Agustus 2013 | 08.10

Investing.com - The dollar traded higher against most major currencies on Monday in a quiet session void of major market-moving news at home, which prompted many investors to snap up safe-haven dollar positions to await the release of U.S. retail sales data due out on Tuesday.

Softer-than-expected Japanese growth figures bolstered the dollar's appeal as well.

In U.S. trading on Monday, EUR/USD was down 0.26% at 1.3308.

In subdued trading, the dollar saw demand from investors seeking a safe and liquid venue to camp out ahead of the release of retail sales data in the U.S. on Tuesday.

Consumer demand drive about 70% of the U.S. economy, and strong retail sales can bolster the dollar by stoking sentiments that monetary stimulus tools won't remain in place for much longer.

Market consensus reports peg July retail sales rising 0.3% compared to June's 0.4% growth, which point to an economy that continues on its path to recovery.

Investors were hoping the data will provide insight as to when the Federal Reserve will begin tapering monetary stimulus programs.

The Fed is currently buying USD85 billion in Treasury holdings and mortgage debt a month from banks to keep long-term interest rates low across the economy, a stimulus tool known as quantitative easing that weakens the dollar as a side effect.

Talk of a timetable outlining an end to stimulus programs could strengthen the greenback, and hopes the data will come in firm gave the greenback support as did soft Japanese growth data.

Preliminary data released earlier revealed that Japan's economy grew by 0.6% in the second quarter, falling short of expectations for 0.9% growth.

Japan's gross domestic product rose 2.6% on year during the April-to-June quarter, below forecasts for an increase of 3.6%.

The greenback was up against the pound, with GBP/USD down 0.23% at 1.5472.

The dollar was up against the yen, with USD/JPY up 0.41% at 96.65, and up against the Swiss franc, with USD/CHF trading up 0.29% at 0.9250.

The dollar was up against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.10% at 1.0298, AUD/USD down 0.47% at 0.9154 and NZD/USD trading down 0.35% at 0.8010.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.26% at 81.38.

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