Tags: united states. growth | china | dollar

US Growth Amid China Slowdown Points to Stronger Dollar

Sunday, 12 Apr 2015 10:37 PM

The diverging fortunes of the world’s two biggest economies mean one thing for currency markets: a stronger dollar.

A gauge of the greenback held its first weekly advance in a month before data Monday forecast to show U.S. retail sales increased by the most in a year, bolstering the case for the Federal Reserve to raise interest rates in 2015. Economists predict China will report its slowest growth since the global recession, fueling demand for haven assets.

“The Fed said rate hikes depend on the data, so market participants will be watching for evidence of whether or not a hike is likely this year,” Toshiya Yamauchi, a senior analyst in Tokyo at Ueda Harlow Ltd., a margin-trading-services provider, wrote in a note to clients. “Concern about China’s economy could spur buying of the dollar and yen.”

The Bloomberg Dollar Spot Index, which tracks the U.S. currency against 10 major peers, was at 1,204.68 at 10:02 a.m. in Tokyo from 1,204.23 at the end of last week, during which it gained 1.8 percent. That was the first weekly advance since it closed at 1,222.12 on March 13, the highest in data going back to 2004.

The greenback was little changed at $1.0613 per euro following a 3.5 percent surge last week, the biggest advance since September 2011. It bought 120.19 yen from 120.22 on April 10.

Net bullish bets for the dollar to strengthen against the euro by hedge funds and money managers remained close to a record, according to Commodity Futures Trading Commission data. Futures positions betting on a stronger greenback versus the shared currency were at 215,258 contracts as of April 8, down from the all-time high of 226,560 reached the week before.

U.S. retail sales rose 1 percent last month, according to a Bloomberg survey of analysts and economists before the data are released Tuesday. Retailers were hurt in February as bitter cold swept over parts of the U.S., discouraging consumer purchases.

China’s economy probably expanded 7 percent in the first three months of 2015 compared with a year earlier, economists in another Bloomberg survey estimate before Wednesday’s report. That would be the slowest pace since the same period in 2009.


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The diverging fortunes of the world's two biggest economies mean one thing for currency markets: a stronger dollar.A gauge of the greenback held its first weekly advance in a month before data Monday forecast to show U.S. retail sales increased by the most in a year,...
united states. growth, china, dollar
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2015-37-12
Sunday, 12 Apr 2015 10:37 PM
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