· The dollar rose to its highest level against a basket of major currencies .DXY in nearly three weeks on Tuesday after U.S. retail sales data showed the largest gain in seven months.
Gains were also supported by news that North Korean leader Kim Jong Un had delayed a decision on firing missiles toward the U.S. Pacific territory of Guam. That was taken by markets as another sign the threats were rhetorical.
The dollar rose by more than 1 percent against the Japanese yen JPY=, touching its highest in more than a week and on pace for its largest daily rise against the yen since July 3. The euro EUR= fell to its lowest against the dollar since July 28.
- The dollar index was last up 0.45 percent at 93.848. It earlier touched its highest level since July 26.
- The dollar was slightly lower against its Japanese counterpart at 110.64 yen JPY=, but was well above a four-month low of 108.72
- The euro edged up 0.1 percent to $1.1743 EUR=, after falling as low as $1.1687 overnight, its lowest since late last month.
· U.S. retail sales recorded their biggest increase in seven months in July as consumers boosted purchases of motor vehicles and raised discretionary spending, suggesting the economy continued to gain momentum early in the third quarter.
Retail sales for June and May also were revised higher, which should help to assuage concerns about consumer spending after a slowdown at the start of the year. Tuesday's upbeat report from the Commerce Department likely keeps the Federal Reserve on course to raise interest rates again in December.
· U.S. business inventories recorded their biggest increase in seven months in June as retailers accumulated stock at a brisk clip amid signs of a pickup in domestic demand.
· The strong showing in retail sales led to an increase in expectations for another Federal Reserve rate hike by the end of the year. Market expectations for at least one new rate hike by the end of the year were at about 54percent Tuesday, up from just 37 percent on Monday, according to the CME Group's FedWatch tool.
· The big deal for markets Wednesday could be the minutes from the Fed's last meeting, if they include any fresh insights on inflation.
That's because the recent string of weak inflation data has raised serious doubts about whether the Fed can raise interest rates again this year, as it has forecast. Fed officials have termed the slowdown in inflation both a concern and transitory.
The minutes, released at 2 p.m., could provide some insight into the view on the Federal Open Market Committee.
· "I can't expect anything hawkish from the minutes," said Masafumi Yamamoto, chief forex strategist at Mizuho Securities in Tokyo.
"In the end, I think the Fed will raise interest rates as early as December this year, and this is not fully priced in the market."
· U.S. President Donald Trump on Tuesday rolled back rules regarding environmental reviews and restrictions on government-funded building projects in flood-prone areas as part of his proposal to spend $1 trillion to fix aging U.S. infrastructure.
· Negotiators from Canada, Mexico and the United States are aiming for an "ambitious" first round of trade talks, a senior U.S. official said on Tuesday, as the countries try to fast-track a deal to modernize the 23-year-old pact by early next year.
The talks start on Wednesday led by U.S. Trade Representative Robert Lighthizer, Canadian Foreign Minister Chrystia Freeland and Mexican Economy Minister Ildefonso Guajardo.
· Oil prices settled little changed on Tuesday after slumping to three-week lows as the U.S. dollar climbed and signs of weaker petroleum demand in China weighed the market down for a second day.
Benchmark Brent crude LCOc1 settled up 7 cents a barrel at $50.80, after retreating to $50.02 during the session. U.S. light crude CLc1 settled down 4 cents at $47.55, off a session low of $47.02, the lowest since July 25.
Reference: Reuters, CNBC
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