After falling against its main counterparts this morning prior to the publication of this afternoon’s US retail sales figures, the ‘Greenback’ has experienced a rebound, strengthening against the majority of its main currency rivals as investors lose their appetite for risk.
The US Dollar Exchange Rate was trading in the region of 99.4100 against the Japanese Yen as of 15:50 pm GMT
Risk-aversion began to dominate markets this afternoon as disappointing US data and developments in the Eurozone pushed investors towards the safe haven US Dollar.
Firstly, the growth outlook of the world’s largest economy received a knock as US retail sales fell by the most for nine-months. The 0.4 per cent decline surprised economists, who had forecast that the level of retail sales would remain unchanged in March.
Separate data showed that sliding energy costs resulted in a decline in US wholesale prices.
After the retail sales report was published a senior economist with Nomura Securities International Inc. commented: ‘Households are now making those difficult choices on how to adjust spending. We have no steam going into the second quarter.’
Similarly, economist Ian Shepherdson stated: ‘The payroll tax increase is hurting. You should expect second-quarter consumption to rise at a much slower pace.’
With the odds of economists slashing US growth forecasts increasing, the US Dollar posted gains against the Euro, its Australian and Canadian counterparts and the British Pound.
Against fellow safe-haven currency the Japanese Yen, the ‘Greenback’ shed 0.7 per cent.
Risk-aversion was also heightened by developments in the Eurozone, where EU ministers are engaged in a two-day policy meeting.
It has already been revealed that the ministers are discussing extending Portugal and Ireland’s rescue loan maturities. They are also expected to touch on Germany’s concerns regarding the reform of the Eurozone’s banking system and the fresh worries in Slovenia.
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