The dollar traded on Tuesday near its highest level in almost a year as the US currency continued to be supported by positive data releases in the worldâs biggest economy. New comments from Federal Reserve officials, which backed a rate hike in December, also boosted the greenback.
A report published by the Department of Commerce on Tuesday showed that US retail sales growth, which is the main driver of the economic growth in the country, was at 0.8% in October. The retail data surpassed forecasts of a 0.6% increase, improving investorsâ sentiment toward the last quarter of 2016. Consumer demand is looking healthy ahead of Christmasâs shopping season, which should further bolster the overall US economic growth. The department also released its business inventories data for September today, showing a small 0.1% increase.
The data release accompanied new comments from a number of Federal Reserve officials. Dallas and Boston Federal Reserve Presidents Robert Kaplan and Eric Rosengren spoke in support for an interest rate hike in December. While Federal Reserve Governor Daniel Tarullo said that the central bank will maintain its course of action as it observes the reaction of markets to Donald Trumpâs presidency.
Investors believe the Federal Reserve will accelerate its pace of rate hikes in 2017 to adjust for the increase in inflation that Donald Trumpâs plans of higher fiscal spending might induce. An increase in interest rates appears all but certain to be decided by the Federal Open Market Committee on December 14. Futures prices show a 90.6% chance of a hike in December and an 87.4% chance of another hike in February, according to the CME Group FedWatch tool.
EUR/USD traded at 1.0728 as of 17:09 GMT, after closing on Monday at 1.0736. The pair touched 1.0812 at 08:40 GMT today, before dropping back to its current level. GBP/USD fell to 1.2426 from 1.2486 on Monday.
The Dollar Index, which measures the US currency against its major peers, rose above 100 for the second day in a row, to touch 100.15 as of 16:56 GMT.
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