The US dollar erased earlier losses against the euro on Wednesday, even as lower than expected data for consumer spending on core retail items weighed on the US currency. The greenback received additional pressure from a big drop in manufacturing activity in New York.
The US Census Bureau released a report earlier today on retail and food services sales, which showed a 0.2% increase to $486.6 billion in October on a seasonally adjusted basis. The increase followed a bigger 1.9% gain in September, according to revised data, while analysts estimated a gain of 0.1% in October. Retail sales increased 4.7% over the last 12 months.
However, core retail sales, which exclude automobile sales and hold more importance for investors for better reflecting consumer spending trends, rose 0.1% despite expectations of a 0.2% increase. Most of the gain was due to higher sales of sporting goods, clothes, and electronics. Meanwhile, sales at gasoline stations declined 1.2% last month, which matched the drop in sales at building material dealers.
A separate report by the US Bureau of Labor Statistics stated that the consumer price index rose 0.1% in October on a seasonally adjusted basis. The index, which is considered a main indicator of inflation in the United States, matched expectations last month following a 0.5% increase in September.
The core consumer price index, which excludes food and energy, rose 0.2% to also match expectation and reach a yearly gain of 1.8%. The index is closely watched by policymakers at the Federal Reserve since they decide the need for monetary policy changes partly due to whether inflation is moving toward the bankâs 2% target.
The US dollar showed resilience against todayâs negative data, even as a third economic release added further pressure on the currency. The Federal Reserve Bank of New York said that its Empire State manufacturing index, which tracks manufacturing within the New York Region, fell to 19.4 in November from 30.2 in October. The index was anticipated to have a smaller decline to 26.0.
EUR/USD traded at 1.1794 as of 15:20 GMT on Wednesday after rising to 1.1858 at 12:40 GMT, the pairâs highest level since October 19. EUR/USD began trading today at 1.1791. GBP/USD was at 1.3162 after rising to 1.3192 at 08:35 GMT, a level last seen on November 13. GBP/USD started the day at 1.3150.
The Dollar Index, which tracks the performance of the US currency against its major counterparts, rose to 93.83 as of 15:19 GMT today from 93.82 yesterday.
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