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The dollar climbed on Tuesday after weak US retail sales data exerted downward pressure on the greenback overnight, while its New Zealand counterpart rose on a better-than-expected inflation data.

The US dollar index, a measure of the dollar’s strength against six major currencies, rose 0.01 percent to $94.78, but was slightly below an intraday high of $95.37 on Monday prior to release of the retail sales report.

The data showed signs of consumers’ hesitation to spend, and came as US bond yields took a break from its 7-year high last week.

The US 10-year Treasury note last stood at 3.17 percent on Tuesday, having reached a 7-year high of 3.26 percent on October 9.

Some analysts saw the dollar’s current movement has been different from a safe-haven currency.

Head of currency strategy at an Australian financial firm Ray Attrill stated that even when US equities were collapsing and there was a risk-off mood in the global markets, the dollar did not trade strong as one would expect.

The equity correction is not done. The dollar is behaving in an asymmetric manner – good news is not so good and bad news is much worse in terms of price action for the dollar, added Attrill.

Against the Japanese yen, the greenback gained 0.3 percent to 112.12. The safe-haven currency hit a 1-month high of 111.61 on Monday.

The dollar also advanced 0.08 percent to 0.9886 against the Swiss franc.

Both the yen and Swiss franc have caught buyers’ interest amid tensions between the US and Saudi Arabia, which has been under pressure since prominent Saudi journalist Jamal Khashoggi, a critic of Riyadh and a US resident, disappeared on October 2 after visiting the Saudi consulate in Istanbul.

New Zealand Dollar Rises on Stronger Inflation Data

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The New Zealand dollar, meanwhile, added 0.3 percent to 0.6574 as the domestic inflation rate exceeded economists’ expectations in the third quarter.

Government data showed consumer price index (CPI) rose 0.9 percent in the three months to the end of September, beating the 0.7 percent increase estimated by economists.

However, the Reserve Bank of New Zealand’s preferred measure of core inflation was left unchanged at 1.7 percent in the third quarter, suggesting there is no need to tighten policy right away either.

The central bank expects to keep official cash rate (OCR) at this level through 2019 and into 2020, longer than what it had projected in May, with the direction of their next OCR move possibly going up or down.   

Reserve Bank Governor Adrian Orr noted that the latest forecast followed the recent slowing in economic expansion with the risks properly balanced on the upside and downside.   

Senior markets strategist Jason Wong said they see a period of consolidation over the next 6 months around the 0.65 level and that they are not yet confident the downward trend is over due to global forces.

Over time the market will price out the easing risk currently priced into the OIS curve, added Wong.

As regards the inflation rate, senior economist Michael Gordon stated that fuel prices accounted for about a third of the growth in the CPI for the quarter, and is likely to push annual inflation above 2 percent in the next quarter.

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