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Dollar at 16-month high after robust U.S. retail sales data

The dollar rose to a 16-month high on Tuesday after data showed U.S. consumers looked past rising prices and drove retail sales higher than expected last month, while the euro slumped amid growth concerns and a surge in COVID-19 cases in Europe.

U.S. retail sales rose 1.7% in October, topping consensus expectations of a 1.4% rise, likely as Americans started their holiday shopping early to avoid empty shelves amid shortages of some goods as the ongoing pandemic squeezes supply chains.

At 3:15 p.m. EST, the dollar index was up 0.385% at 95.898, having earlier touched 95.928, its highest since July 2020.

The dollar has rallied since U.S. inflation data last week showed consumer prices surged to their highest rate since 1990, fueling speculation that the Federal Reserve may raise interest rates sooner than expected.

 

 

U.S. retail sales surge as holiday shopping starts, brightening economic outlook

U.S. retail sales surged in October as Americans eagerly started their holiday shopping early to avoid empty shelves amid shortages of some goods because of the ongoing pandemic, giving the economy a lift at the start of the fourth quarter.

Retail sales jumped 1.7% last month, the largest gain since March, after rising 0.8% in September. It was the third straight monthly advance and topped economists' expectations for a 1.4% increase. Sales soared 16.3% year-on-year in October and are 21.4% above their pre-pandemic level.

October's broad increase in sales partly reflected higher prices as monthly consumer inflation surged 0.9% in October, which boosted the annual rate to 6.2%.

Excluding automobiles, gasoline, building materials and food services, retail sales shot up 1.6% last month after rising 0.5% in September. These so-called core retail sales correspond most closely with the consumer spending component of gross domestic product. Adjusting for inflation, retail sales are up at a roughly 5% annualized rate from the third-quarter average.

Businesses are also making steady progress replenishing depleted inventories, which should help to keep factories humming and support the economy. Business inventories increased 0.7% in September, a third report from the Commerce Department showed.

Reference: Reuters