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Tags: Dollar Index, DXY, FED, Retail Sales
Unemployment claims fell to a one-month low, signalling a gradual and orderly slowdown in the labour market. Companies are scaling back hiring, struggling to keep up with the influx of labour driven by increased immigration.
Conversely, retail sales surged by 1.0% last month, marking the largest gain since January 2023, following a downwardly revised 0.2% decline in June. Consumers are maintaining their spending by seeking bargains and opting for lower-priced alternatives. These better-than-expected figures boosted the U.S. dollar index by 0.46%, closing at 103.04.
(U.S Dollar Index Daily Price Chart)
Federal Reserve officials need not overly concern themselves with the economic outlook, as downside risks are rapidly diminishing with fewer layoffs and strong consumer spending. Signs that demand is holding steady might lead financial markets to temper their expectations for a 50-basis point interest rate cut next month. The likelihood continues to favour a quarter-point reduction, especially with inflation showing a mild increase in July.
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