Dollar broadly higher after strong U.S. retail sales report

Shutterstock photo - The dollar was broadly higher against the other major currencies on Wednesday as stronger-than-forecast U.S. retail sales data for February fuelled hopes that the U.S. economic recovery is gaining momentum.

During U.S. morning trade, the dollar hit three-month highs against the euro, with EUR/USD dropping 0.63% to 1.2951.

The Commerce Department said U.S. retail sales rose 1.1% in February, beating expectations for a 0.5% increase.

Core retail sales, which exclude automobile sales, also rose more-than-expected, climbing 1.0% compared to expectations for a 0.2% gain.

The data fuelled optimism that the recovery in the U.S. is gaining traction after data last week showed that the economy added more jobs than expected in February, bringing the unemployment rate to a four-year low of 7.7%.

The euro remained under pressure after Italy saw the yield on three-year bonds rise to the highest level since December at the first auction of the country's debt since a one-notch downgrade by Fitch's ratings agency last week in the wake of inconclusive elections.

Meanwhile, data showing that industrial production in the euro zone fell 0.4% in January, more than expectations for a 0.1% decline underlined concerns over the economic outlook for the region.

The dollar was trading close to three-and-a-half year highs against the yen, with USD/JPY up 0.10% to 96.17 as expectations for more easing by the Bank of Japan continued to pin down the Japanese currency.

The dollar was hovering close to two-and-a-half year highs against the pound, with GBP/USD edging up 0.13% to 1.4919.

Data on Tuesday showing that U.K. manufacturing and industrial output slumped in February reinforced concerns over the possibility of a triple-dip recession and fuelled speculation that the Bank of England will restart its asset purchase program.

The greenback hit session highs against the Swiss franc with USD/CHF advancing 0.49% to 0.9516.

The greenback was higher against its Canadian, Australian and New Zealand counterparts, with USD/CAD rising 0.24% to 1.0280, AUD/USD losing 0.35% to trade at 1.0287 and NZD/USD down 0.50% to 0.8226.

The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, climbed 0.47% to 83.21. - offers an extensive set of professional tools for the Forex, Commodities, Futures and the Stock Market including real-time data streaming, a comprehensive economic calendar, as well as financial news and technical & fundamental analysis by in-house experts.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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