16.09.202115:24:00UTC+00U.S. Dollar Appreciates As Fed Tapering Hopes Reignite After Strong Retail Sales Data

The U.S. dollar drifted higher against its major counterparts in the European session on Thursday, as an unexpected spike in the nation's retail sales for August renewed hopes that the Fed would make a decision to reduce bond purchase program this year.

Data from the Commerce Department showed that retail sales unexpectedly rebounded in August after a steep drop in the previous month.

Retail sales climbed by 0.7 percent in August after plunging by a revised 1.8 percent in July.

The rebound surprised economists, who had expected retail sales to decrease by another 0.8 percent compared to the 1.1 percent slump originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales surged up by 1.8 percent in August after tumbling by a revised 1.0 percent in July.

Economists had expected ex-auto sales to edge down by 0.2 percent compared to the 0.4 percent drop originally reported for the previous month.

On economic front, data from the Labor Department showed that first-time claims for U.S. unemployment benefits rebounded slightly more than expected in the week ended September 11.

The report said initial jobless claims climbed to 332,000, an increase of 20,000 from the previous week's revised level of 312,000.

Economists had expected initial jobless claims to rise to 328,000 from the 310,000 originally reported for the previous week.

The Federal Reserve will meet next week with investors focused on timeline to begin tapering of the asset purchase program.

Investors hope that the Fed is unlikely to make the tapering announcement at next week's meeting in the wake of soft inflation data.

The currency showed mixed trading against its major peers in the Asian session, by falling against the yen and holding steady against other rivals.

The greenback advanced to its highest level since July 2 against the franc, at 0.9270. At yesterday's trading close, the pair was quoted at 0.9197. Further rise in the currency may challenge resistance around the 0.94 region.

The greenback was up by 0.5 percent against the euro, at nearly a 3-week high of 1.1752. The EUR/USD pair was worth 1.1816 when it closed deals on Wednesday. The greenback is seen facing resistance around the 1.16 level.

First estimate from Eurostat showed that the euro area trade surplus increased in July on higher shipments.

The trade surplus increased to a seasonally adjusted EUR 13.4 billion from EUR 11.9 billion in June.

The greenback gained 0.4 percent against the pound, touching a 1-week peak of 1.3782. The pound-greenback pair had ended yesterday's trading session at 1.3836. The greenback is likely to find resistance around the 1.35 level, if it rises again.

The greenback approached a 2-day high of 109.83 against the yen, up by 0.6 percent from a low of 109.21 seen at 1:30 am ET. The pair had closed Wednesday's deals at 109.37. Next near term resistance for the greenback is likely seen around the 112.00 level.

Data from the Ministry of Finance showed that Japan posted a merchandise trade deficit of 635.4 billion yen in August.

That was well shy of expectations for a shortfall of 47.7 billion yen following the downwardly revised 439.4 billion yen surplus in July (originally 441 billion yen).

The greenback spiked higher to nearly a 3-week high of 0.7282 against the aussie, after a 2-day decline to 0.7347 at 9:30 pm ET. The greenback was worth 0.7330 per aussie at Wednesday's New York session close. Should the greenback continues its uptrend, 0.71 is possibly seen as its next resistance level.

Data from the Australian Bureau of Statistics showed that the Australian economy parted ways with 146,300 jobs in August.

That was well off from forecasts for the loss of 90,000 jobs following the addition of 2,200 jobs in July.

Following a 2-day fall to 0.7136 at 6:45 pm ET, the greenback changed its direction and jumped to a 2-week high of 0.7065 against the kiwi. At Wednesday's close, the pair was valued at 0.7102. Immediate resistance for the U.S. currency is seen around the 0.69 level.

Data from Statistics New Zealand showed that New Zealand's gross domestic product expanded 17.4 percent on year in the second quarter of 2021.

That exceeded expectations for an increase of 16.3 percent following the upwardly revised 2.9 percent gain in the previous quarter (originally 2.4 percent).

The greenback rebounded from its Asian session's 2-day low of 1.2616 against the loonie and was trading at 1.2696. The greenback was trading at 1.2623 against the loonie at yesterday's close. Further rally may take the greenback to a resistance around the 1.29 area.

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