The U.S. dollar held in a flat range overnight, maintaining all of its gains from the day prior, despite a rebound in risk appetite. Indeed, European equities rose over 0.5% and U.S. stock futures show American shares will erase all of its losses from yesterday’s session. The greenback remained in its tight range from the prior month against the Japanese yen as the two “safe-haven” currencies ebb and flow with the prevailing risk sentiment. This morning’s economic docket showed that U.S. retail sales rose in November at the slowest pace in five months, indicating faster job growth may be needed to spark the biggest part of the economy. The 0.2% gain in sales followed a 0.6% advance in October that was more than initially reported, Commerce Department figures showed today. The print failed to meet expectations of a 0.6% gain. Traders will now shift their attention to this afternoon’s Federal Reserve interest rate decision amid speculation officials will maintain their pledge to keep borrowing costs near a record low. Fed policy makers will keep their target rate in a range of zero to 0.25% at today’s gathering, according to a Bloomberg News survey.
The Euro remained near a two-month low against the greenback and within 1.0% of its weakest level of the year even after global stocks strengthened and the European bailout fund held a successful bond auction. Indeed, the European Financial Stability Facility held its first auction of bills, attracting bids for more than three times the amount of securities that sold. Meanwhile, the ZEW Center for European Economic Research in Mannheim, Germany said its index of investor and analyst expectations, which aims to predict economic developments six months in advance, increased to minus 53.8 from a three year low of minus 55.2 in November. The Euro has fallen 1.6% in the past month, the most among 10 developed-nation currencies, according to Bloomberg Correlation-Weighted Indexes.
The British pound remained near monthly lows against the U.S. dollar despite a rise in stocks and the release of strong economic data. A gauge of housing compiled by the Royal Institution of Chartered Surveyors rose to minus 17 percentage points from minus 24 points in October, easing concern the economy may slip into a recession. Also, the Office of National Statistics reported that consumer prices in the U.K. rose 4.8% from a year earlier, down from a 5.0% gain in October. While the inflation rate is still more than double the Bank of England’s target, the slowing inflation will help the central bank maintain its narrative of keeping interest rates at their all-time low.
