The release of positive retail sales data for the month of December boosted the performance of the US dollar against major currencies before the gains were erased. The US dollar rose briefly after the US Commerce Department released data regarding consumption during the month of December.
The positive consumption data led to the greenback rising sharply against currencies such as the British pound, the euro, and the Japanese yen. This was a major relief to dollar bulls given that the US dollar had opened trading on a losing trend.
The data released indicated that advance retail sales, which makes up the biggest portion of GDP was quite strong in December, but still fell short of expectations. Auto sales contributed largely to the 0.6% figure reported for advance retail sales, which was lower than the expected 0.7%.
The US Consumer Sentiment was lower than expected as it hit 98.1 versus the expected 98.5 for January. The index was lower than the 98.2 recorded in December.
Analysts predict that because the sales figures for December were not weak, there is a significant likelihood that the Federal Reserve will hike interest rates during their March meeting. However, many still expect the Fed to exhibit a cautious approach when formulating fiscal policies.
The EUR/USD was trading at 1.0642 as at 17:42 GMT having tested lows of 1.0596 shortly after the consumption data was released. The USD/JPY was trading at 114.71 having reached a high of 115.45 after the announcement. The GBP/USD was trading at 1.2205 having reached lows of 1.2121.
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