The U.S. dollar on Monday slipped into negative territory, following a highly anticipated retail sales report that drew little reaction from the greenback. Instead, traders focused on a buoyant British pound, which rallied as traders awaited a key Brexit vote.
U.S. retail sales rose by 0.2% in January, while the December reading of negative 1.2% was revised to negative 1.6%. January figures excluding cars and excluding cars and gas, rose 0.9% and 1.2%, respectively.
In December, the same retail sales report undercut expectations and registered its worst drop in nine years, spooking investors worrying about the health of the U.S. economy, though subsequent retail data weren’t as weak as the headline number suggested.
Business inventories for December, meanwhile, grew 0.6%.
The ICE U.S. Dollar Index DXY, -0.23% was last down 0.1% at 97.202. Last week, the popular gauge, which measures the greenback against six rivals, climbed 0.8%.
Late Sunday, Federal Reserve Chairman President Jerome Powell said on CBS News program “60 Minutes” that the U.S. economy was overall in a good place and that interest rates were fine where they are, reiterating his previous wait-and-see stance on further rate increases.
The British pound GBPUSD, +0.0989% was the best G-10 performer of the day, as traders are gearing up for yet another Brexit-filled week. The pound last bought $1.3140, compared with $1.3014 late Friday.
The presumably final vote on U.K. Prime Minister Theresa May’s Brexit deal is due to take place in the British Parliament on Tuesday, amid some reports that the U.K.
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According to FX strategists at Nomura, “we will likely witness 1) a second meaningful vote, 2) a parliament likely to vote against a no-deal Brexit, and a vote on 3) an Article 50 extension.” Article 50 is the portion of the Treaty of the European Union dealing with withdrawal from the bloc.
The U.K. is scheduled to leave the European Union in 18 days, on March 29, and so far, no deal governing London’s future relationship with the European continent is in place.
Elsewhere in Europe, the euro EURUSD, +0.0356% bought $1.1246, up 0.2% from Friday. The eurozone’s biggest economy, Germany, reported stronger-than-expected trade numbers for January, but its industrials production for the same month came in below forecasts.
On the note of trade, the People’s Bank of China Gov. Yi Gang affirmed on Sunday that China would avoid manipulating its currency to boost exports, and said the issue was discussed during the U.S.-China trade negotiations. Last month, the U.S. demanded that China’s yuan be stabilized as part of a trade deal. Yi said in his comments that “our exchange rates is relatively stable. But at the same time, that stability does not mean the exchange rate is fixed.”
The yuan slightly weaker versus the dollar on Monday, with the buck buying 6.7264 yuan USDCNY, +0.0000% in Beijing, up 0.1%, and 6.7318 yuan USDCNH, -0.0074% in the offshore market, little changed from Friday.
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