By Caroline Valetkevitch
NEW YORK, Sept. 15 (Reuters) – The dollar was marginally higher against the yen on Thursday, after data showed that US retail sales rebounded unexpectedly in August, while the Swiss franc hit its strongest against the euro since 2015.
The dollar shed some gains after data showed retail sales rose 0.3% last month, but demand for goods is cooling as the US Federal Reserve hikes interest rates. Economists polled by Reuters had expected unchanged sales.
The dollar was supported by the view that the Fed will continue to aggressively tighten monetary policy.
Many market participants believe that the latest data, including the surprise rise in consumer prices this week in August, will likely give the Federal Reserve enough reason to announce a third straight rate hike of 75 basis points next Wednesday.
“The details of the retail sales report weren’t nearly as strong as the headline. When you break down the retail sales report, it was generally a bit softer,” said Adam Button, ForexLive Chief Currency Analyst.
For the dollar, “the default mode in the forex market is to buy the dollar unless there is a good reason to sell it,” he said.
The dollar rose 0.2% against the yen to 143.47 JPY=EBS, after falling 1% on Wednesday amid news that the Bank of Japan had checked bank exchange rates in a possible preparation for the yen purchase. The Dollar Index = US dollars rose 0.1% to 109.69.
Investors continued to debate whether the Japanese authorities would really step in to prop up their currency, which has fallen sharply this year.
A record Japanese trade deficit in August also underscored the bearish trend for the yen.
Japanese monetary authorities “intensified their rhetoric this week and the market is really still bluffing. It’s very hard to talk down a currency when the fundamentals are so different,” Button said.
At the start of the session, the Swiss franc rose against the euro EURCHF=, CHFEUR=R against the common currency to its strongest level since January 2015, when the Swiss National Bank abandoned its floor of CHF 1.20 per euro.
Meanwhile, the dollar lost 0.1% against the Swiss franc CHF=EBS.
The SNB is also meeting next week and there is some market speculation that it could join the Fed and ECB in outsized rate hikes. According to data from Refinitiv, money markets are fully pricing in a 75 basis point rate hike by the SNB.
The euro rose 0.2% to $0.9996. It hit a 20-year low of $0.9864 last week.
In the crypto markets, Ethereum inventor and co-founder Vitalik Buterin wrote on Twitter that a major software upgrade of the Ethereum blockchain to reduce energy consumption has been completed.
the token ETH=BTSP, which underpins the Ethereum network, was last down 8.6%. Bitcoin BTC=BTSP fell by 2.2%.
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Currency bid prices at 16:00 (2000 GMT)
US Close previous session
YTD percent change
= US dollars
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(Additional reporting by Alun John in London and Rae Wee in Singapore; Editing by Sam Holmes, Kim Coghill, Hugh Lawson, Diane Craft and Jonathan Oatis)
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