The US dollar had a busy day in the markets yesterday, seeing plenty of movement on the back of its own economic releases. The overall result was negative for the dollar, ending the day weaker against the majority of its major partners. This was largely due to retail sales figures, which fell by more than had been anticipated. This caused the dollar to touch the lowest point in five weeks against the yen, as well as in three weeks against the euro.
While the dollar has performed well of late on the back of positive speculation over interest rate rises, this negative data brought the edge off this, as some investors took it as a sign that the economic recovery is faltering. Elsewhere on the data front, inflation figures from the Producer Price Index (PPI) and the Empire State manufacturing index were behind expectations, adding to the woes.
Focus will turn to the labour market today to recover from yesterday’s poor showings. The unemployment claims will provide the major number for the day, given its crucial link to interest rate decisions. To support this will be the manufacturing index from the Philadelphia Federal Reserve, as investors look for some evidence of more stable economic expansion, while words from a member of the Federal Reserve could provide further clues as to long-term sentiment.