USD rallies after US retail sales unexpectedly rise
USD traded higher last week after US retail sales defied expectations and rebounded in August. The strong data has boosted the expectation that the Federal Reserve could look to make an announcement regarding the tapering of bond purchases as soon as next month.
Philadelphia Fed President Patrick Harker became the latest to join a growing number of Fed officials who are in favor of the central bank tapering support this year.
US retail sales rebounded in August rising 0.7% after falling -1.1% in July against the expectation of -0.7% owing to rising Delta covid cases and lower consumer confidence.
The closely watched consumer price index, CPI rose 0.3% month on month in August, down from 0.5% in July. Core inflation rose just 0.1% month on month and 4.0% on an annual basis, down from 4.3%.
INR rises on upbeat RBO outlook
INR ended the week marginally higher after RBI saw the inflation trajectory shifting down more favorably than initially anticipated. As supply conditions return to normal and productivity gains the bank expects sustained decline in core inflation. This will allow the RBI to maintain its accommodative stance.
Consumer prices rose 5.3% in August, below July’s reading of 5.59% and below the 5.6% forecast.
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