Dollar continues to rebound ahead of US retail sales

The dollar rose in European trade on Tuesday on track for the second rise in a row away from recent six-week lows, ahead of important US data on retail sales for June, which will provide clues on the strength of economic performance in the second quarter. 

The dollar is pressured by lower US 10-year treasury yields following less aggressive remarks by Fed Chair Powell, which boosted the odds of Fed rate cuts in September and November. 

The Index

The dollar index rose 0.15% to 104.40, with a session-low at 104.23. 

The index closed up 0.2% yesterday, the first profit in four days away from six-week lows at 104.03. 

US Retail Sales 

Investors await important US June retail sales data, crucial for gauging the health of the economy as consumer spending represents 70% of total GDP.

US Yields 

US 10-year treasury yields fell by 1.4%, on track to hit multi-month lows, in turn hurting investments in the dollar.

The developments came following less aggressive remarks by Fed Chair Jerome Powell this week. 

Fed Chair Jerome Powell said in an earlier speech in Washington that latest consumer prices data bolsters confidence that inflation is returning to the 2% target sustainably, with three consecutive readings presenting better than expected results. 

US Rates

Following the remarks, the odds of a 0.25% September rate cut by the Federal Reserve rose to a full 100% according to the Fedwatch tool, with a similar 100% likelihood of a rate cut in November.