Investing.com - The greenback edged up against most major currencies on Tuesday after December retail sales numbers beat consensus forecasts and kept expectations going for the Federal Reserve to wind down monthly bond purchases throughout the year.
Profit taking trimmed the greenback's gains.
U.S. trading on Tuesday, EUR/USD was up 0.04% at 1.3679.
The Commerce Department reported earlier that U.S. retail sales rose 0.2% in December, beating expectations for a 0.1% increase.
Core retail sales, which exclude automobile sales, expanded by 0.7% in December, well above forecasts for a 0.4% increase.
The news sparked demand for the dollar by cementing expectations for the Federal Reserve to continue scaling back its USD75 billion bond-buying program this year.
Fed asset purchases soften the greenback by depressing long-term interest rates to encourage investing and hiring, thus making stocks more attractive while such programs remain in place.
Risk-on demand for stocks trimmed some of the greenback's gains.
On Friday, the Bureau of Labor Statistics reported that the U.S. economy added 74,000 jobs in December, well below expectations for a 196,000 increase, which spooked markets though by Tuesday, investors began to view the figure as an anomaly and likely the product of rough winter weather that disrupted hiring.
Meanwhile in Europe, the euro saw demand after European Central Bank Governing Council member Ewald Nowotny said the euro zone economy might surprise to the upside this year.
Elsewhere, data released earlier revealed that industrial production in the euro zone beat expectations in November.
Eurostat said industrial production rose 1.8% in November, beating expectations for a 1.4% gain, recovering from a downwardly revised decline of 0.8% in October. On a year-over-year basis, industrial production rose 3%, more than double expectations for a 1.4% increase.
The greenback was down against the pound, with GBP/USD up 0.36% at 1.6443.
The U.K. Office for National Statistics reported earlier that its consumer price index rose 2.0% on year last month, off from November's 2.1% reading in November and just shy of consensus forecasts calling for an unchanged reading.
Still, it was the first time since 2009 that the U.K. inflation rate came in line with the Bank of England’s official 2% target, which strengthened the pound though the pair remained range bound.
Consumer prices rose 0.4% month-on-month, below expectations for a 0.5% rise.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.7% in December, down from 1.8% in November and off expectations for an unchanged reading.
The U.K. house prices index climbed 5.4% in November, the ONS added, below expectations for a 5.9% gain.
The dollar was up against the yen, with USD/JPY up 1.12% at 104.15, and up against the Swiss franc, with USD/CHF up 0.34% at 0.9022.
The dollar was largely higher against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.79% at 1.0946, AUD/USD down 1.03% at 0.8960 and NZD/USD flat at 0.8376.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.13% at 80.72.
On Wednesday, the U.S. is to release data on producer price inflation and a report on manufacturing activity in the New York region.
Profit taking trimmed the greenback's gains.
U.S. trading on Tuesday, EUR/USD was up 0.04% at 1.3679.
The Commerce Department reported earlier that U.S. retail sales rose 0.2% in December, beating expectations for a 0.1% increase.
Core retail sales, which exclude automobile sales, expanded by 0.7% in December, well above forecasts for a 0.4% increase.
The news sparked demand for the dollar by cementing expectations for the Federal Reserve to continue scaling back its USD75 billion bond-buying program this year.
Fed asset purchases soften the greenback by depressing long-term interest rates to encourage investing and hiring, thus making stocks more attractive while such programs remain in place.
Risk-on demand for stocks trimmed some of the greenback's gains.
On Friday, the Bureau of Labor Statistics reported that the U.S. economy added 74,000 jobs in December, well below expectations for a 196,000 increase, which spooked markets though by Tuesday, investors began to view the figure as an anomaly and likely the product of rough winter weather that disrupted hiring.
Meanwhile in Europe, the euro saw demand after European Central Bank Governing Council member Ewald Nowotny said the euro zone economy might surprise to the upside this year.
Elsewhere, data released earlier revealed that industrial production in the euro zone beat expectations in November.
Eurostat said industrial production rose 1.8% in November, beating expectations for a 1.4% gain, recovering from a downwardly revised decline of 0.8% in October. On a year-over-year basis, industrial production rose 3%, more than double expectations for a 1.4% increase.
The greenback was down against the pound, with GBP/USD up 0.36% at 1.6443.
The U.K. Office for National Statistics reported earlier that its consumer price index rose 2.0% on year last month, off from November's 2.1% reading in November and just shy of consensus forecasts calling for an unchanged reading.
Still, it was the first time since 2009 that the U.K. inflation rate came in line with the Bank of England’s official 2% target, which strengthened the pound though the pair remained range bound.
Consumer prices rose 0.4% month-on-month, below expectations for a 0.5% rise.
Core CPI, which excludes food, energy, alcohol, and tobacco costs rose 1.7% in December, down from 1.8% in November and off expectations for an unchanged reading.
The U.K. house prices index climbed 5.4% in November, the ONS added, below expectations for a 5.9% gain.
The dollar was up against the yen, with USD/JPY up 1.12% at 104.15, and up against the Swiss franc, with USD/CHF up 0.34% at 0.9022.
The dollar was largely higher against its cousins in Canada, Australia and New Zealand, with USD/CAD up 0.79% at 1.0946, AUD/USD down 1.03% at 0.8960 and NZD/USD flat at 0.8376.
The dollar index, which tracks the performance of the greenback versus a basket of six other major currencies, was up 0.13% at 80.72.
On Wednesday, the U.S. is to release data on producer price inflation and a report on manufacturing activity in the New York region.