US Dollar Slides As Retail Sales Lift Stocks, Boost Risk Sentiment

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The US dollar is sliding against many of its currency peers to finish the trading week, driven by rising risk sentiment in the financial markets amid better-than-expected retail sales. But the greenback is still on track for a weekly gain due to fluctuating expectations over a fiscal stimulus and relief package, rising COVID-19 cases, and uncertainty surrounding the 2020 presidential election.

According to the US Census Bureau, retail sales increased by 1.9% in September, up from a 0.6% jump in August. The market had penciled in a gain of 0.7%. This represents the biggest monthly jump since June. Last month’s ballooning receipts were driven by clothing stores (11%), department stores (9.7%), sporting goods (5.7%), and automobile dealers (4%). But retail sales fell at electronics and appliance stores (-1.6%). Retail sales advanced at an annualized rate of 5.4%.

The industrial and manufacturing sectors experienced contraction again in September. Industrial production tumbled 0.6% while manufacturing production slipped 0.3%. Capacity utilization slumped to 71.5% last month. Business inventories rose slightly by 0.3% in August.

In other data, the University of Michigan released its many index readings for October. The monthly preliminary figures found that inflation expectations came in at 2.7%, five-year inflation expectations fell to 2.4%, current conditions dropped to 84.9, consumer sentiment rose to 81.2, and consumer expectations surged to 78.8.

The mixed economic data led to mixed financial markets on Friday as stocks struggled to weigh the recent developments. The Dow Jones Industrial Average climbed 180 points to 28,764, the S&P 500 edged up 0.24%, and the Nasdaq Composite Index dipped 0.06%. Metal commodities were mixed, with gold futures hovering around $1,900 an ounce and silver prices finishing higher at $24.28 per ounce.

us dollarIn addition to the latest numbers, foreign exchange investors will be keeping a focus on the US presidential election, the rising number of coronavirus cases, and the on-again, off-again fiscal stimulus and relief negotiations.

The US Dollar Index, which measures the greenback against a basket of currencies, fell 0.16% to 93.70, from an opening of 93.80. The index is on track for a weekly boost of roughly 0.7%, but it is still down nearly 3% on the year. The DXY has cratered around 10% since peaking 103.00 earlier this year.

The USD/CAD currency pair declined 0.28% to 1.3190, from an opening of 1.3226, at 19:47 GMT on Friday. The EUR/USD rose 0.06% to 1.1716, from an opening of 1.1707.

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