Welcome to the Pure FX account of what’s affected the exchange rates overnight.
The UK pound has gained almost a full cent against the US dollar overnight, and the euro half a cent against the buck, as retail sales in the US decline for the third consecutive month. Sales dipped -0.5% in June, compared to forecasts of a +0.2% rise, adding to declines in the two preceding months. In total, US retail sales in the second quarter (Q2) have fallen 0.8% compared to the same time 12 months ago.
This has caused the dollar to fall not just because it signals the US economy is in dire straits. In addition, the report has led to increased speculation that Fed Chairman Ben Bernanke will signal he intends to begin a third round of quantitative easing to support growth, when he speaks to Congress late this afternoon.
If Mr. Bernanke fails to announce this, as is widely expected at this point, the dollar could strengthen again, as global risk appetite wanes.
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