Dollar climbs after upbeat U.S. retail sales, comments from Fed’s Powell

The dollar advanced on Tuesday after a record increase in U.S. retail sales in May following two straight months of declines, reinforcing a growing belief that the worst may be over for the world’s largest economy. The U.S. currency turned positive against the yen after the data, while the euro hit session lows versus the greenback.

The dollar further extended gains after Federal Reserve Chair Jerome Powell painted a bleak picture of the U.S. economy in the wake of the coronavirus pandemic. That bolstered the dollar’s safe-haven appeal. In the first of two-day hearings, Powell said there is significant uncertainty about the timing and strength of the U.S. recovery.

“Powell is sounding quite negative here. I think he’s being realistic,” said Juan Perez, currency trader at Tempus Inc in Washington. “The U.S. dollar is gaining a little bit here just because of this uncertainty that Powell mentioned. It seems like monetary officials are preparing for a much longer recession for the U.S. economy.”

His testimony came a day after the Fed said it would start buying corporate debt on Tuesday as part of an already announced stimulus scheme, and launched its Main Street Lending Program for businesses. In midday trading, the dollar index was up 0.5% at 97.062, with the euro dropping 0.6% to

The greenback, meanwhile, was little changed against the yen at 107.34 yen, paring early gains. Tuesday’s data showed U.S. retail sales jumping 7.7% last month, the biggest rise since the government started tracking the series in 1992. Data for April was revised to show a record 14.7% drop in sales instead of the previously reported 16.2%. Economists polled by Reuters had forecast retail sales would rise 8% in May. The data followed a report early this month showing the U.S. economy created 2.5 million jobs in May.

Dollar climbs after upbeat U.S. retail sales, comments from Fed’s Powell, Reuters, Jun 16