Dollar falls broadly on profit taking despite upbeat U.S. data: Feb 16, 2017

Market Review - 15/02/2017   22:16GMT  

Dollar falls broadly on profit taking despite upbeat U.S. data

The greenback surrendered its earlier gains made on the back of upbeat U.S. economic data and closed the day lower against majority of its peers on broad-based profit taking as investor took profit on their long usd positions after several days of gains. 

In a report, the U.S. Commerce Department said that retail sales rose 0.4% in January from the prior month, compared to expectations for a 0.1% increase. December retail sales increased 1.0%, whose figure was revised from an initial 0.6% gain. 

Core retail sales, which exclude automobile sales, increased by a seasonally adjusted 0.8% in January, compared to forecasts for an advance of 0.4%. Core sales in the prior month were revised to a 0.4% advance from the prior 0.2% gain. 

Consumer prices increased by a seasonally adjusted 0.6% last month, compared to forecasts for 0.3% and following a gain of 0.3% in December. 

Year-over-year, consumer prices were 2.5% higher from the same month a year earlier, compared to expectations for a 2.4% increase and after rising 2.1% in the preceding month. 

Versus the Japanese yen, dollar traded with a firm bias in Asia as traders continued to support the buck after Tuesday's hawkish testimony from Fed's Yellen and priced gained to 114.60 in early European morning. The greenback then rose to an intra-day high at 114.96 at New York open on upbeat U.S. inflation and retail sales data, however, the pair pared its gains and later hit session lows of 113.88 in New York afternoon due partly to the drop in U.S. industrial production. 

In a separate report, the Federal Reserve said that industrial production dropped 0.3% in January, worse than expectations for a 0.1% advance. 

Despite rebounding to 1.0586 in Asia, the single currency met renewed selling there and tumbled to an intra-day low at 1.0522 at New York open on dollar's broad-based strength post the release of upbeat U.S. data. However, euro pared its losses and staged a strong recovery to 1.0608 in New York afternoon. 

The British pound continued to remain under pressure in Asia and dropped in European morning on the back of downbeat UK jobs data and hit an intra-day low at 1.2383 at New York open post the release of upbeat U.S. data. However, cable pared its losses and staged a strong rebound to 1.2481 in tandem with euro in New York afternoon. 

In a report, Office for National Statistics said that U.K. claimant count change fell to a seasonally adjusted -42.4K, from -20.5K in the preceding month whose figure was revised down from -10.1K. Analysts had expected U.K. claimant count change to rise 0.8K last month. 

In other news, Greek FinMin Tsakalotos said 'urges IMF to make decision on bailout participation - op-ed in Germany's Bild newspaper; if IMF wants to participate in Greece bailout it should stop making unreasonable demands; IMF accusations that Greece's reform drive has slowed are untrue; IMF is wrong to ask Greece for more pension cuts and reducing tax relief.' 

Data to be released on Thursday: 

Australia employment change, unemployment rate, Germany WPI, U.S. building permits, housing starts and jobless claims.