Dollar higher against weak greenback

money, trading, dollarThe Australian dollar is higher against a weaker US dollar following the release of some disappointing American economic data.

At 0700 AEST on Wednesday, the local unit was trading at 76.25 US cents, up from 75.89 cents on Tuesday.

US retail spending jumped 0.9 per cent in March, but it was short of market expectations and only the first rise in four months.

Other data out overnight showed that American small business optimism fell in March.

BK Asset Management MD, Kathy Lien, said that the figures pushed the US dollar lower against the major currencies.

“For the first time in six trading days, we saw broad based weakness in the US dollar,” she said.

“Investors needed a reason to take profits on their long dollar trades and the softer retail sales report provided the perfect excuse.”

Lien said that the report would have an impact on the US Federal Reserve’s decision to increase its interest rate.

“The recovery in spending should only harden their plans to raise interest rates this year,” she said.

“We have long argued that a rate hike will happen in September versus June and the latest report reinforces our view.”

The main focus for the market on Wednesday will be on the release of official Chinese economic growth figures for the March quarter and the release of the Westpac/Melbourne Institute Survey of consumer sentiment.

AAP

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