Dollar Lower As U.S. Retail Sales Plunge, Trade Worries Mount

By | May 15, 2020
Dollar Lower As U.S

The U.S. dollar declined against its most major counterparts in the European session on Friday, as retail sales plunged more than expected in April and the U.S. government changed rule to block shipments of semiconductors to Huawei Technologies.

Data from the Commerce Department showed that retail sales cratered by 16.4 percent in April after tumbling by a revised 8.3 percent in March. Economists had expected retail sales to plummet by 12.0 percent compared to the 8.7 percent slump originally reported for the previous month.

Excluding sales by motor vehicle and parts dealers, retail sales plunged by an even steeper 17.2 percent in April after falling by a revised 4.0 percent in March.

Ex-auto sales were expected to tumble by 8.6 percent compared to the 4.5 percent nosedive originally reported for the previous month.

Trade tensions intensified after the Trump administration said it is blocking shipments of semiconductors to China’s Huawei Technologies.

The Commerce Department said it was changing an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”

The greenback fell to 106.86 against the yen, from a 3-day high of 107.43 seen at 8:00 pm ET. The greenback is seen finding support around the 101.00 region.

Data from the Bank of Japan showed that Japan producer prices fell 1.5 percent on month in April – missing forecasts for a decline of 0.9 percent, which would have been unchanged from the March reading.

On a yearly basis, producer prices sank 2.3 percent versus forecasts for a decline of 1.6 percent following the 0.4 percent drop in the previous month.

The greenback dropped to 1.0851 against the euro and 0.9698 against the franc, after rising to 1.0789 and 0.9745, respectively in early deals. The greenback may face support around 1.00 against the euro and 0.90 against the franc.

In contrast, the greenback rose to 1.2145 against the pound, its highest level since March 27. On the upside, resistance is likely seen near the 1.19 level.

The greenback hit a new 3-week high of 0.5944 against the kiwi, from a 2-day low of 0.6016 set at 7:15 pm ET. The greenback is likely to face resistance around the 0.56 region, if it gains again.

The greenback bounced off to 1.4110 against the loonie and 0.6418 against the aussie, from its early 2-day lows of 1.4018 and 0.6474, respectively. The next likely resistance for the greenback is seen around 1.45 against the loonie and 0.60 against the aussie.