U.S. retail sales boost global risk appetite

U.S. retail sales boost global risk appetite

U.S. retail sales surprise the upside, fueling risk-on sentiment of traders across the board.

Bitcoin hits $60,000 as traders look at first U.S. ETFs in this year.

NEW YORK LONDON, Oct 15 Reuters - The dollar edged lower against a basket of international currencies on Friday, on track to break its five week winning streak as global risk appetite rebounded, reducing demand for the safe-haven currency.

The global stock markets have rallied this week as fears about stagflationary economies have been eased by forecast-beating corporate earnings in the United States.

In September, Unexpectedly strong U.S. retail sales data helped boost sentiment Retail sales rose 0.7% in the last month compared to expectation of a loss of 0.2%, helped in part by higher prices.

The risk appetite here remains really, really strong for the time being, said Boris Schlossberg, managing director of FX strategy at BK Asset Management.

That's helping the high beta currencies, such as the pound, the euro and the Aussie, simply because the market is feeling much more positive, he said.

The dollar index rose after the retail sales data, but then trended lower and was down 0.19% for the week after appreciating for the previous five weeks. It was last lost on Tuesday at 93.941, down 0.106% from Friday, after he hit a one-year high of 94.563.

Sterling rose 0.69% to $1.3765, its highest since Sept. 17, while the euro edged up 0.02% to $1.1601 after touching $1.1624 on Thursday for the first time since Sept. 4.

The risk-sensitive Aussie dollar climbed 0.01% to $0.7416, having gained the currency much earlier in the session. New Zealand's dollar was jumped to $0.7065, expanding Tuesday's surge by 0.42%.

The Japanese yen was the biggest loser, falling to as low as 114.46 yen to $0, its weakest since October 2018 ; The yen is a safe-haven currency and has been knocked by the rebound in sentiment in Asia including in the Philippines.

The dollar was up 0.42% against the yen in last, at 114.15 yen.

The greenback had rallied against its major peers since early September on expectations the U.S. central bank would tighten monetary policy more quickly than originally anticipated amid an improving economy and surging energy prices.

Minutes of the Fed's September meeting confirmed this week that a reduction in stimulus is all but certain to start this year, although policymakers are sharply divided over inflation and what they should do about it.

The market is currently pricing in approximately 50 50 chances of a 25 basis point rate hike by July.

Analysts said investors who were long-term investors had been squeezed out of their positions in the past few days, and inflation data did not support a further rise in the currency.

The absence of any upside surprise in US CPI consumer price inflation data and confirmation of the actual expectations on Fed tapering in the minutes provided no catalyst for additional USD buying and hence the sell-off, said MUFG analyst Derek Halpenny.

Bitcoin has reached $60,000 for the first time in six months and is not far from a record high after futures. Its market direction is to approve a bitcoin futures exchange traded fund.