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18/06/24
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USD Trims Gains After May US Retail Sales Miss Expectations
On Tuesday, the US dollar trimmed gains against the euro after retail sales data showed signs of weakness among consumers in the U.S., bolstering the case for Federal Reserve rate cuts later in the year.
In May, U.S. retail sales rose less than expected as lower prices for motor vehicles and gasoline weighed on receipts at auto dealerships and service stations.
The sales growth trend has been slowing as higher interest rates and prices forced households to prioritize essentials and reduce discretionary spending.
Equiti Capital’s chief economist, Stuart Cole, said although it might have come later than expected initially, the tight financial conditions created by the Federal Reserve finally seemed to be putting strain on household budgets.
Cole said the softer pace of consumption may be welcomed by the Fed, as it makes the job much easier to return CPI to target, especially given the crucial role domestic consumption fulfills in driving economic activity in the U.S.
The U.S. dollar index, which measures its strength against 6 other major currencies, was up 0.1% at 105.40.
Fed Funds futures pricing showed a 67% chance of at least one rate cut by Sept., up from 63% yesterday.
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