By Rae Wee
SINGAPORE, Feb 16 (Reuters) - The dollar advanced on
Thursday after strong U.S. retail sales data underpinned the
resilience of the world's largest economy, cementing the case
that the Federal Reserve still has further to go in tightening
rates.
Elsewhere, the Australian dollar slid after data on Thursday
showed that employment surprised in January by falling for a
second straight month, while the jobless rate jumped to its
highest since last May.
The Aussie , which was marginally higher on the day
prior to the data release, fell more than 0.5% to an intra-day
low of $0.6868 in the aftermath, and last bought $0.6872.
"The readings for January have really undershot market
expectations," said Carol Kong, a currency strategist at
Commonwealth Bank of Australia.
"Overall, some weakness indicated by the report ... probably
caused markets to pare back some of the interest rate rises
pencilled in for the RBA rate hikes."
Meanwhile, U.S. retail sales rebounded sharply in January
after two straight monthly declines, driven by purchases of
motor vehicles and other goods, the U.S. Commerce Department
said on Wednesday.
The greenback surged on the back of the data release and
clung to most of those gains on Thursday, with the U.S. dollar
index last 0.07% higher at 103.87, after hitting a near
six-week top of 104.11 in the previous session.
The euro was little changed at $1.0687, while the
kiwi slid 0.28% to $0.6263.
"The U.S. economy continues to operate well. There's very
strong labour market data coming through, and the consumers are
well supported," said Jarrod Kerr, chief economist at Kiwibank.
"We do think the Fed's got a little bit more work to do."
The retail sales data came just a day after U.S. figures
showed inflation slowing but still sticky.
Markets are now expecting U.S. rates to peak above 5.2% by
July. In other currencies, sterling fell 0.19% to
$1.2015, after sliding more than 1% in the previous session.
British inflation slowed more than expected in January and
there were signs of cooling price pressure in parts of the
economy watched closely by the Bank of England, data released on
Wednesday showed.
This added to signs that further hefty BoE interest rate
hikes are unlikely.
"It's still a very high number. The good news is that
inflation is likely peaking, or has peaked. So the outlook for
UK's inflation is improving," said Kiwibank's Kerr.
The yen rose marginally to 134.07 per dollar,
having drawn some support after the nomination of Kazuo Ueda as
the next central bank governor raised market hopes that the
71-year-old could end super-low interest rates in Japan sooner
than initially expected.
"The Bank of Japan looks set to change its ultra-loose
policy as inflation takes root," said analysts at BlackRock
Investment Institute.
"We think the wage and inflation dynamics at play mean the
current policy stance has likely run its course."
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(Reporting by Rae Wee; Editing by Sam Holmes)
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