WASHINGTON (dpa-AFX) - The U.S. dollar was firm against most major currencies on Tuesday with stronger than expected retail sales data, and its safe haven appeal after the Federal Reserve chairman's comments that there is significant uncertainty about the pace of recovery supporting the uptick.
Data released by the Commerce Department showed retail sales in the U.S. rebounded by much more than anticipated in the month of May, skyrocketing 17.7%, after plunging by a revised 14.7% in April.
Economists had expected retail sales to spike by 8% compared to the 16.4% nosedive originally reported for the previous month. Excluding auto sales, retail sales still surged up by 12.4% in May, after plummeting 15.2% in April.
A report from the National Association of Home Builders said the NAHB/Wells Fargo Housing Market Index spiked to 58 in June from 37 in May, continuing to rebound from the nearly eight-year low of 30 set in April. Economists had expected the index to climb to 45.
Testifying before the Senate Banking Committee, Powell cautioned that 'significant uncertainty remains about the timing and strength of the recovery.'
Powell noted some recent indicators have pointed to stabilization and even a modest rebound in economic activity following the coronavirus-induced downturn. He specifically cited the Labor Department's recent jobs report showing employment unexpectedly jumped by 2.5 million jobs in the month of May.
The Fed chief attributed the surprise job growth to some businesses reopening amid the easing of restrictions on mobility and commerce and the extension of federal loans and grants as well as stimulus checks and unemployment benefits supporting household incomes and spending.
However, Powell noted that output and employment levels remain far below their pre-pandemic levels and warned that there continues to be significant uncertainty about the economic outlook.
'Much of that economic uncertainty comes from uncertainty about the path of the disease and the effects of measures to contain it,' Powell said. 'Until the public is confident that the disease is contained, a full recovery is unlikely.'
The dollar index rose to 97.25 by mid-morning but later eased to 97.01. However, it was still holding in positive territory, gaining 0.32% from previous close.
Against the Euro, the dollar firmed up to $1.1264, gaining more than 0.5%.
The Pound Sterling was weak at $1.2571, easing from $1.2606. The U.K. jobless rate was unchanged from the previous quarter, while earnings growth slowed sharply in the three months to April, when the economy entered a lockdown for a large part to slow the spread of the coronavirus, preliminary data from the Office for National Statistics showed.
The Yen, another safe-haven currency, was little changed against the greenback at 107.30 a dollar. Japan's central bank on Tuesday kept its key interest rate unchanged and expanded the size of the coronavirus lending program.
The Swiss franc was weaker at 0.9514 a dollar. According to a report released by the Federal Government's Expert Group, Swiss economy is set for its worst slump since 1975 this year due to the impact from the coronavirus, or Covid-19, and a revival is likely in the second half of the year, if there is no second wave of the pandemic.
Gross domestic product adjusted for sporting events is forecast to fall by 6.2% this year, which is slightly better than the 6.7% decline predicted in April, the State Secretariat for Economic Affairs, or SECO, said. The unemployment rate is expected to average 3.8%. In 2021, the economy is expected to grow 4.9%, against an earlier forecast for a 5.2% expansion.
The Aussie was lower at US$0.6890, compared with US$0.6919 Monday evening, while the Loonie was losing more than 0.4%, dropping down to 0.6890 a dollar.
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