The Commerce Department said retail sales rose 0.5% last month, just below economists’ expectations of a 0.6% gain. Data for April was revised up to show retail sales gaining 0.3%, instead of dropping 0.2% as previously reported.
The dollar index against a basket of currencies was last 97.35, up 0.53% on the day and the highest since June 3.
· With international economic growth slowing, investors are nervous that U.S. President Donald Trump will impose tariffs on Japan and Europe, which could result in more dovish central banks globally and give the dollar a relative advantage.
The U.S. economy is also seen as better placed to handle trade tensions than other countries.
The dollar “has benefited to date from negative globalization news as the domestic side of the U.S. economy has looked sufficiently robust to deal with trade-related headwinds,” Morgan Stanley analysts said in a report on Friday.
“Other countries look less resilient in the face of trade tensions due to higher exposure to global import demand, dependence on manufacturing exports, and underdeveloped domestic demand,” they said.
· The Fed is not widely expected to lower rates when it meets on June 18-19, though investors will watch for new signals that a cut by the U.S. central bank may come in July.
Interest rate futures traders are pricing in a 23% chance of a cut in June, and an 87% likelihood of at least one cut in July, according to the CME Group’s FedWatch Tool.
· The other major catalyst for the dollar in the near term is whether the United States and China will renew trade negotiations at the G20 summit on June 28-29.
Trump said on Friday it didn’t matter if Chinese President Xi Jinping attends the summit, adding that China would eventually make a trade deal with the United States.
· Hong Kong leader Carrie Lam on Saturday indefinitely delayed a proposed law that would have allowed extraditions to mainland China, in a dramatic retreat after anger over the bill triggered the city’s biggest and most violent street protests in decades.
Hong Kong’s leader Carrie Lam apologized to its people on Sunday as an estimated 1 million-plus black-clad protesters insisted that she resign over her handling of a bill that would allow citizens to be sent to mainland China for trial.
On Sunday, she apologized for the way the government had handled the draft law, which had been scheduled for debate last Wednesday, but gave no further insight into its fate.
U.S. President Donald Trump would raise the issue of Hong Kong human rights with China’s President Xi Jinping at a potential meeting of the two leaders at the G20 summit in Japan this month, U.S. Secretary of State Mike Pompeo said on Sunday.
· Oil rose on Friday after attacks on two oil tankers in the Gulf of Oman this week raised concerns about potential supply disruptions, but prices remained on track for a weekly loss on fears that trade disputes will dent global oil demand.
U.S. West Texas Intermediate crude futures settled 23 cents higher at $52.74. Brent crude futures rose 70 cents, or 1.1%, at $62.01 a barrel.
Still, Brent was on course to register a weekly decline of more than 1.5% and U.S. crude fell 2.7% on the week.
· The United States does not want to go to war with Iran but will take every action necessary, including diplomacy, to guarantee safe navigation through vital shipping lanes in the Middle East, Secretary of State Mike Pompeo said on Sunday.
U.S.-Iran tensions are high following accusations by the administration of U.S. President Donald Trump that Tehran carried out attacks last Thursday on two oil tankers in the Gulf of Oman, a vital oil shipping route. Iran has denied having any role.
Saudi Arabia’s crown prince blamed Iran for attacks on two oil tankers in the Gulf of Oman and called on the international community to take a “decisive stand” but said in an interview published on Sunday that the kingdom does not want a war in the region.
Foreign minister Jeremy Hunt said on Sunday Britain is “almost certain” Iran was behind attacks on oil tankers in the Gulf of Oman, adding that London did not believe anyone else could have done it.
Reference: CNBC, Reuters
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