Dollar Advances As U.S. Core Retail Sales Increase Unexpectedly; Fed Minutes In Focus

(RTTNews) - The U.S. dollar was higher against its major counterparts in the European session on Wednesday, as the nation's core retail sales rose unexpectedly in July and investors awaited the minutes of the Federal Reserve's latest policy meeting for signals on further interest rate hikes.

Data from the Commerce Department showed that core retail sales grew by 0.4 percent in July following a downwardly revised 0.9 percent advance in June.

Economists had expected ex-auto sales to edge down to 0.1 percent.

U.S. retail sales were virtually unchanged in July after climbing by a downwardly revised 0.8 percent in June.

Economists had expected retail sales to inch up by 0.1 percent compared to the 1.0 percent jump originally reported for the previous month.

The Fed releases the minutes from the July meeting at 2 pm ET, which could shed more light on the future path of rate hikes.

Fed funds futures are showing a 52.5 percent chance of a 75 basis point hike and a 47.5 percent possibility of 50 basis point move.

The greenback showed mixed trading against its major rivals in the Asian session. While it rose against the yen, it held steady against the franc and the euro. Versus the pound, it dropped.

The USD/JPY pair touched a 9-day high of 135.39. The pair was worth 134.22 when it ended deals on Tuesday. The greenback may face resistance around the 136.00 region, if it gains again.

The USD/CHF pair approached a 1-week high of 0.9544, up 0.5 percent on the day. At Tuesday's close, the pair was valued at 0.9493. Immediate resistance for the dollar is likely seen around 0.98 the level.

The greenback was up at 1.0145 against the euro. The pair had closed Tuesday's deals at 1.0171. Next key resistance for the greenback is found around the 0.99 level.

After falling to a 2-day low of 1.2142 around 2 am ET, the greenback edged up to 1.2048 against the pound. The pound-greenback pair had finished yesterday's trading session at 1.2093. Further rally in the currency may challenge resistance around the 1.19 region.

Data from the Office for National Statistics showed that the UK consumer price inflation accelerated further in July to the highest since 1982 on surging food and fuel prices, adding pressure on the Bank of England to tighten the policy again despite the looming recession.

Consumer price inflation rose to 10.1 percent in July from 9.4 percent in June. Inflation was forecast to climb moderately to 9.8 percent.

The greenback appreciated 1.2 percent against the aussie, hitting a 9-day high of 0.6918. The aussie-greenback pair was worth 0.7021 at Tuesday's close. The greenback is likely to locate resistance around the 0.68 region.

The greenback climbed to a 2-day high of 1.2933 against the loonie, from a 2-day low of 1.2827 seen at 2:00 am ET. The greenback was trading at 1.2840 per loonie at yesterday's close. Should the currency rallies again, 1.32 is possibly seen as its next resistance level. The greenback firmed to an 8-day high of 0.6273 against the kiwi, after dropping to a 2-day low of 0.6383 following the Reserve Bank of New Zealand's interest rate decision. At yesterday's trading close, the pair was quoted at 0.6345. Continuation of the greenback's uptrend may lead it to a resistance around the 0.61 region.

New Zealand's central bank raised its benchmark rate by another 50 basis points and hinted at more to come as policymakers focused on inflation pressures and capacity constraints.

The Monetary Policy Committee of the RBNZ decided to lift the Official Cash Rate to 3.00 percent from 2.50 percent. The outcome of the meeting came in line with expectations.

At 2:00 pm ET, the Fed releases the minutes from July 26-27 meeting.