Dollar Surges Following Release of Retail Sales Data

By Chelsey Dulaney Features Dow Jones Newswires

The dollar surged Tuesday after better-than-expected retail sales data bolstered confidence in the U.S. economy.

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The WSJ Dollar Index, which measures the U.S. currency against 16 others, rose 0.5% to 86.66.

A Commerce Department report showed sales at retailers and restaurants jumped 0.6% in July -- the strongest sales growth all year. Economists surveyed by The Wall Street Journal had expected a 0.4% increase in sales.

The data "underline that the consumer recovery remains in good shape going into the second half of the year," said analysts at Capital Economics in a research note.

The retail sales report follows a string of weak inflation readings, including Friday's weaker-than-expected consumer price report, which have raised concerns about the health of the economy and the path for higher interest rates.

Investors are now pricing in a 53% chance that the Fed raises rates again this year, up from 37% a day earlier, according to CME Group data. Higher rates boost the dollar by making U.S. assets more attractive to yield-seeking investors.

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The dollar also continues to rebound against safe-haven currencies such as the Japanese yen and Swiss franc as tensions between the U.S. and North Korea ease this week. North Korean state media said Tuesday that Kim Jong Un decided not to attack the U.S. territory of Guam.

The dollar rose 1% against the Japanese yen to Yen110.678 and less than 0.1% against the Swiss currency to 0.973 franc.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

(END) Dow Jones Newswires

August 15, 2017 17:50 ET (21:50 GMT)