By Gina Lee
Investing.com – The dollar was down on Tuesday morning in Asia, and the Euro was at a 16-month low, as investors await U.S. retail sales data. A strong reading could pressurize the U.S. Federal Reserve to hike rates.
The U.S. Dollar Index that tracks the greenback against a basket of other currencies inched down 0.09% to 95.438 by 9:25 PM ET (2:25 AM GMT).
The USD/JPY pair inched up 0.08% to 114.21.
The AUD/USD pair gained 0.22% to 0.736, with the Reserve Bank of Australia (RBA) releasing the minutes from its November meeting earlier in the day. “The risks are tilted towards AUD/USD weakness today given the large gap between market pricing for rate hikes in 2022 and RBA rhetoric,” said Commonwealth Bank of Australia (OTC:CMWAY) analyst Joe Capurso.
The NZD/USD pair inched up 0.10% to 0.7054.
The USD/CNY pair went down 0.22% to 6.3682, as U.S President Joe Biden and his Chinese counterpart Xi Jinping kicked off a virtual summit.
The GBP/USD pair edged up 0.11% to 1.3432.
Bank of England Governor Andrew Bailey said to a parliamentary committee that he was “very uneasy” about inflation, which caused the euro’s fall to its steepest slide against the pound in six months. Overnight the EUR/USD tumbled below $1.14 for the first time since July 2021 as the number of COVID-19 cases in Europe rise.
European Central Bank (ECB) President Christine Lagard pushed back on the need to tame inflation, telling European Union lawmakers, “if we were to take any tightening measures now, it could cause far more harm than it would do any good.”
"We expect the cautiousness of the ECB on policy to limit recovery prospects for the euro against the dollar in the coming months," Rabobank senior FX strategist Jane Foley told Reuters.
"Our current mid-2022 forecast of EUR/USD at $1.14 is looking outdated... we will be revising our forecasts later in the week."
“In our view, the forecasts point to decent data, which following last week's acceleration in the U.S. consumer price index could increase bets over a hike by the Fed as soon as the tapering process is over,” JFD Group head of research Charalambos Pissouros said in a note.
Meanwhile, U.S. retail sales figures will be released later in the day, and Monday's NY Empire State Manufacturing Index was a stronger-than-expected 30.90 in November. The Eurozone consumer price index is due on Wednesday.