The US Dollar (USD) weakened broadly against its major peers including the Pound (GBP) and Euro (EUR) on Wednesday as data out of the world’s largest economy widely disappointed and increased fears over a global economic slowdown.
Downbeat reports for Retail Sales, Producer Price Inflation and Manufacturing all dent sentiment
Data released by the Washington based Commerce Department showed that retail sales fell unexpectedly in September as purchases of cars, petrol and clothing fell. The report added to signs that the recent positive jobs data has yet to have an effect on consumer spending.
Seasonally adjusted retail sales declined by 0.3% in September from the previous months figure as car sales dropped by 0.8%. Dealers said that car sales fell from August’s number of 17.5 million to 16.43 million.
A separate report showed that US Producer Price Inflation (PPI) in the world’s largest nation fell 0.1% last month. Economists had been calling for a rise of 0.1% after the flat reading seen in August. The falling figure sent the US Dollar lower as it eases pressure on the Federal Reserve to increase interest rates from the current low level.
Adding to the session’s poor data releases was a report released by the Federal Reserve Bank of New York, which showed that its Empire State Manufacturing Index tumbled sharply in October. The index fell from last month’s five-year high figure of 27.5 to just 6.2. Any figure above zero indicates growth. October’s reading is the lowest since April.
‘It adds to the weaker tone of the data and could be the first real sign that the stronger US Dollar and global slowdown are taking their toll on activity,’ said Paul Diggle, an economist at Capital Economics.
The set of disappointing data releases has increased concerns that consumer demand may be weakening and inflation is struggling to gain traction.
Pound to US Dollar Exchange Rate Forecast
The Pound is forecast to regain lost ground against the US Dollar and push back above the 1.60 level as concerns over the health of the global economy and a slowdown in the USA drags the ‘Greenback’ lower.
The US Dollar could make further losses on Thursday if the latest Jobless Claims Data comes in below economist expectations.
Also due for publication, is the latest Industrial and Manufacturing Production reports. With the New York, data coming in well below expectations traders should brace themselves for a worse than forecast result.
UPDATE
The US Dollar to Pound Sterling exchange rate is currently trending in the region of 0.6244.
The US Dollar to Euro exchange rate is currently trending in the region of 0.7807.
In the aftermath of the publication of the US Beige Book the US Dollar has strengthened against both the Pound and the Euro. The book indicated that the majority of the districts reported modest to moderate growth. The Federal Reserve suggested that the latest reports were more or less in line with the previous Beige Book publication.
Sterling has gathered momentum on Thursday after Bank of England policymaker Martin Weale made a hawkish speech. Weale suggested that the recent improvement in unemployment is cause enough to hike rates. He argued that less unemployment will drive up inflationary pressure and a benchmark rate increase would combat that.
The single currency has slumped against the majority of its most traded currency rivals amid growing speculation that the currency bloc is facing a debt-crisis. The European Union are preparing to look into governments’ draft budgets to assess the risk of a re-emergence of a debt-crisis.
US Dollar (USD) Exchange Rates
[table width=”100%” colwidth=”50|50|50|50|50″ colalign=”left|left|left|left|left”]
Currency, ,Currency,Rate ,
US Dollar,
,Pound Sterling,0.6259 ,
US Dollar,,Euro,0.7837 ,
US Dollar,,Canadian Dollar,1.1322 ,
US Dollar,,Australian Dollar,1.1380 ,
Pound Sterling,,US Dollar,1.5982 ,
Euro,,US Dollar,1.2746 ,
[/table]
