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Rate-cut wagers rise after dovish comments from policymakers
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Dollar wobbles but holds ground on shifting expectations
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US retail sales miss forecast, producer prices rise
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US consumer confidence dips in November
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Yen locked in on intervention zone, traders keep wary eyes
(Adds market comment in paragraphs 4-5, updates prices)
By Gertrude Chavez-Dreyfuss
NEW YORK, Nov 25 (Reuters) - The U.S. dollar slid on Tuesday
as a series of mixed economic data, some of which was delayed and
therefore dated, reinforced expectations that the Federal Reserve will
cut interest rates next month.
In afternoon trading, the euro was up 0.5% against the
dollar at $1.1576, while sterling gained 0.8% to $1.3203.
The dollar index, a measure of performance against its
major counterparts, fell 0.5% to 99.746 following the release of
September retail sales and producer price data. It initially had been
holding onto gains from last week, when the index rose nearly 1%.
"The dollar most certainly deserves to be down today as the
September data released this morning proved that the end of Q3
experienced stagflation," said Juan Perez, director of trading at
Monex USA in Washington.
He pointed to signs of low demand, with September retail sales
rising less than expected, as well as stubborn price growth, seen in
the slight rise in producer prices.
Data showed U.S. retail sales rose 0.2% in September, less than
0.4% forecast by economists polled by Reuters and slowing from an
unrevised 0.6% gain in August.
Producer prices, on the other hand, increased 0.3%, in line with
expectations, after an unrevised 0.1% drop in August. At the core
level, however, prices inched up 0.1%, below the consensus forecast of
0.2%.
The latest U.S. consumer confidence number declined to 88.7 in
November, from an upwardly revised 95.5 in October, which further hurt
dollar sentiment. Economists polled by Reuters had forecast the index
would edge down to 93.4 from the previously reported 94.6 in October.
"More worries about what lies ahead ... hence, putting purchases
for major items on hold," wrote Jennifer Lee, senior economist at BMO,
in emailed comments.
Tuesday's economic data followed dovish comments from policymakers
in the past few days that helped to cement rate cut expectations.
On Monday, Fed Governor Christopher Waller said the job market was
weak enough to warrant another quarter-point rate cut in December,
though action beyond that depended on a flood of data that was delayed
by the federal government shutdown.
Waller's comments followed similar remarks by New York Fed
President John Williams on Friday.
Traders are now pricing in an 83% chance of a cut next month, up
from 50% a week earlier, CME FedWatch showed. That huge swing
underscores the challenge the market faces in pricing in near-term
rates in the absence of economic data, caused by the longest-ever U.S.
government shutdown which ended on November 14.
In other currency pairs, the yen, which has been on the
defensive since hitting 10-month lows last week, firmed on Tuesday to
155.99 per dollar, leaving the dollar down 0.6% against the Japanese
currency.
Investors have been waiting for any signs of official buying from
Tokyo to support its currency, which has weakened by nearly 10 yen
since the start of October after fiscal dove Sanae Takaichi took over
as Japan's prime minister.
Francesco Pesole, currency analyst at ING, said thinner
liquidity around the U.S. Thanksgiving holiday later this week could
present favorable conditions for Bank of Japan intervention in
dollar/yen, ideally after a market-driven correction in the pair.
Elsewhere, the dollar fell 0.3% against the Chinese yuan to 7.0829
in the offshore market while the New Zealand dollar rose
0.2% to US$0.5623, after sliding more than 2% this month ahead of an
expected rate cut by the Reserve Bank of New Zealand on Wednesday.
In cryptocurrencies, bitcoin remained under pressure,
falling 1.9% to $87,098.02. It is down nearly 20% this month.
Currency
bid
prices at
25
November?
08:24
p.m. GMT
Descripti RIC Last U.S. Pct YTD Pct High Low
on Close Change Bid Bid
Previous
Session
Dollar 55
Euro/Doll 512
Dollar/Ye 885
Euro/Yen 11
Dollar/Sw 59
Sterling/ 096?
Dollar/Ca 9
Aussie/Do 436
Euro/Swis 13
Euro/Ster 66
NZ 92
llar
Dollar/No 13
Euro/Norw 78
Dollar/Sw 71
Euro/Swed 01
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