The US Dollar Index edged higher today as it appears the divergence between the Federal Reserve Bank and its major peers will shortly widen. Investor expectations remain high that the Fed is on the brink of a rate hike, despite the softness in growth globally. The Dollar is also finding support against the Euro after comments were made by several ECB officials which hinted at more easing ahead, including further cuts into already negative deposit rates.
As reported at 10:53 am (GMT) in London, the EUR/USD was trading at $1.0735, down 0.18%. In today’s trading, the pair ranged from $1.0725 to $1.0767, a relatively narrow trading band for this favorite and volatile pair. The US Dollar Index was trading higher at 99.07 .DXY, a gain of 0.11%. Market players tend to use the Dollar Index to gauge sentiment for the greenback relative to its major rivals.
Look Ahead to Retail Sales
While the Fed has clearly hinted at a tighter policy, Friday’s retail sales data could be final piece of the puzzle to make that determination. Consumers are the driving force behind the US economy, and an improvement in retail sales will prove that the American consumer foresees a brighter economic future and thus is willing to spend money. Any disappointment in the figures could be seen as a possible setback and would weigh on the Dollar.