NEW YORK (Forex News Now) – The dollar rose significantly in currency market trading today, gaining against six major currencies on the back of a strong retail sales report for the month of October, even with the addition of a negative report from a manufacturing gauge in New York.
So far today, the U.S. Dollar Index is up 0.57%, to 78.528.
Earlier this morning, the U.S. Department of Commerce announced that retail sales in the U.S. rose by 1.2% for the month of October, up 7.3% when compared to numbers from October, 2009. The rise exceeded consensus estimates of a 0.7% gain and notched the largest gains seen in the past seven months.
The news offers hope that the holiday shopping season about to arrive will boost flagging sales and maintain upward moment. This is important because consumer spending accounts for approximately 70% of American economic activity.
Analysts appear to be leaning in that direction. Michael Woolfolk, an economic analyst at BNY Mellon Global Markets, said, “Clear evidence of renewed life in household spending since July indicates that the market pessimism this summer had very little lasting impact on consumer activity.”
A favorable consumer confidence survey released last week from the University of Michigan correlates with today’s retail sales report to support Woolfolk’s statements and perhaps point to the beginning of a sustained recovery, even with consumer sentiment still near a two-year low.
There is still room for concern, though, especially noting the makeup of the products being purchased. Consumers are still largely staying away from high-dollar, credit-sensitive purchases such as furniture, home furnishings, and electronics. Car sales were the main driver of the increase, which could mask weak demand for other products.
Alan Ruskin, a strategist at Deutsche Bank, voiced concern when he suggested that consumer spending is not showing “meaningful acceleration” heading into the holiday shopping season.
The dollar nevertheless was boosted, gaining 0.69% on the beleaguered euro and climbing to 1.3614. The dollar also picked up 0.53% on the pound, to 1.6062, 0.46% on the Canadian dollar, to 1.0064, and 0.32% on the Swiss franc, to 0.9837. The only currency that has outperformed the dollar today is the Aussie, gaining 0.16% on USD to 0.9902.
The upcoming release of the U.S. CPI YoY figures for October on Wednesday could unveil more useful forex trading news for investors looking for signs of meaningful gains in the economy.