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August 18, 2016

Dollar plunge on Fed Minutes, Pound ticks higher fueled by Retail Sales report

Dollar plunge on Fed Minutes, Pound ticks higher fueled by Retail Sales report

Greenback saw a fresh wave of selloff on Wednesday as publication of Minutes of July FED meeting revealed an overwhelming bias of the Central Bank to extend period of low borrowing costs in order to spur global growth.

Futures on US currency traded at 94.31 level in London session on Thursday, lowest since 25 of June. EURUSD rose 0.25% to 1.1317, trading near two-month high at 1.1332 reached on Wednesday.

The dollar remained under pressure after July FED Minutes showed that officials are at variance whether to raise rates on coming minutes with majority of members voting to hold off the hike. The report states that some members expect that economic conditions in US will soon fit monetary tightening while other part of policymakers preferred to leave their political choice open.

dovish report

In the euro zone, data showed that consumer price index fell in July by 0.6% compared to the initial estimate of growth of 0.2%. In annual terms, the CPI rose 0.2%, in line with expectations.

GBP / USD pair grew by 0.88% to nearly two-week high of 1.3154. Sterling strengthened after the Office for National Statistics reported that the volume of UK retail sales rose in June by 1.4% compared to the previous decline of 0.9%. Analysts have been way off the mark with their projections, expecting only 0.2% growth in June.

In annual terms, retail sales increased by 5.9% after 4.3% in June. The consensus forecast had predicted an increase of 4.2%. The Core index of retail sales, excluding car sales, increased during the month by 1.5%, after falling in June by 0.9%. Analysts had predicted an increase of 0.4% last month.

Australian and New Zealand dollars strengthened, AUD / USD pair retreated 0.44% to 0.7689, and the pair NZD / USD gained 0.30% to 0.7274. Earlier Thursday, the Australian Bureau of Statistics reported that the number of employed persons in the country increased in July to 26,200, while the expected increase of 11,000. The unemployment rate fell last month to 5.7% from 5.8% in June. Analysts expected no change.

The pair USDJPY trades almost unchanged at 100.30, near a six-week low of 99.52 reached on Tuesday, while the pair USDCHF fell 0.32% to 0.9595.

Pair USD / CAD fell 0.21% to 1.2818, trading close to a six-week low 1.2793 on Tuesday. Commodity currencies are supported by the rebound in oil prices after data on Wednesday showed a surprise contraction in US inventories last week.

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