Dollar remains unloved; sterling drops on weak retail sales By Investing.com

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© Reuters.

By Peter Nurse

Investing.com – The U.S. dollar fell in early European trade on Friday, hovering around seven-month lows amid concerns about a U.S. economic slowdown, while sterling retreated after weak sales data.

At 03:15 ET (08:15 GMT), the , which tracks the greenback against a basket of six other currencies, was trading 0.1% lower at 101.750, just above the seven-month low of 101.51 seen on Wednesday.

The index is down 1.3% this year after sharp losses in the final quarter of 2022, as investors bet on a slowdown in its interest rate hike amid signs inflation has peaked.

At the same time, US data this week suggested the world’s largest economy was slowing, with a 1.1% decline in the month in December, down 0.7% and down 1.3%.

“This is the third consecutive month of contraction in industrial activity with output declines appearing broadly,” analysts at ING said, in a note. “With the weakness in retail sales, the steep drop in industrial production and news of more job layoffs adding to fears that the United States could already be in recession.”

Elsewhere, it fell 0.1% to 1.2372 after the UK unexpectedly fell in December, falling 1%, much weaker than the expected 0.5% monthly rise.

“Retail sales fell again in December with hints that consumers are cutting back on their Christmas shopping due to affordability concerns,” said Heather Bovill, Office of National Statistics deputy director of surveys and economic indicators.

rose 0.2% to 1.0850, trading around levels not seen since early April 2022, after European Central Bank President warned at the World Economic Forum in Davos, Switzerland on Thursday that inflation figures remain “too high”, reiterating the need for aggressive . monetary policy decisions.

rose 0.3% to 128.81 after Japan’s rise of 4.0% in December from a year earlier, double the central bank’s 2% target.

Trading in the yen has been volatile of late amid expectations that the yen will soon end its ultra-easy monetary policy in the near future.

rose 0.5% to 0.6945, rose 0.6% to 0.6439, while fell 0.1% to 6.7705, and the yuan will lose 1.3% this week, as rising cases of COVID-19 in China cast doubt on its near-term economic prospects.

On Friday, the main loan kept its benchmark loan at historic lows for a fifth straight month.

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