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Positive US retail sales provide respite to Dollar

US retail sales rose by 0.7 per cent in July, the most in four months, brightening the economic growth outlook.

Centtrip: Positive US retail sales provide respite to Dollar

An uplift in US retail sales took some pressure off the Dollar and eased concerns about the world’s top economy. However, analysts cautioned against reading too much into one piece of data, given growing risks to the outlook.

Data showed US consumers continued to splurge in July, providing some relief for investors after the US bond market sounded alarms of a recession. This week’s inversion in the US Treasury yield curve, which has historically preceded several past recessions in the US, has reignited worries about the negative economic impact of the Sino-US trade war.

The greenback held onto its gains at the open this morning against safe-haven currencies such as the Japanese Yen and the Swiss Franc, taking a breather amid fears of recession and violent protests in Hong Kong.

In Asian trading, the Dollar initially extended gains and the Yen fell as Japanese stocks recouped early losses and US Treasury yields rose slightly. However, the move faded quickly, partly reflecting thin trading during the summer holiday season.

The Dollar Index edged higher by 1 per cent to 98.218, having recovered from its three-week low it hit on 9 August.

China yesterday, 15 August vowed to counter the latest US tariffs on $300 billion’s worth of Chinese goods, but President Donald Trump said any pact would have to be on the US terms, suggesting there was no sight of a resolution. Trump, who is seeking re-election in 2020 and had made the economy and his tough stance on China a key part of his 2016 campaign, also said any agreement must meet US demands.

A day after inversion, the US yield curve steepened a little. Curve inversion occurs when long-term yields dip below short-term yields.

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