Friday, 14 Jan 2011

Forex: USD May Rise after Retail Sales Publication

Just over an hour before the US market releases its monthly retail sales reports and already we are beginning to see signs of a minor USD correction vs. the EUR and GBP to the major downswing experienced for the past few days.

The growth of the US dollar against the Pacific currencies, like the Australian dollar and Japanese yen, has helped stabilize the greenback against its European rivals. The EUR/USD jumped over the last several trading days to a price near 1.3400. Today, however, the pair appears to be flattening out as a test to this latest move.

The retail sales figures, to be published at 13:30 GMT, have the potential to help the greenback if they show moderate growth in consumer spending levels. Inflationary fears in Europe, as expressed by ECB President Jean-Claude Trichet, also may hold the EUR steady prior to today's market closing, instead of allowing it to push higher.