Today's Dollar Rate: FX markets to focus on the USD today with retail sales numbers on tap

"These are some of the most important pieces of U.S. data and certainly the most important event risk this week" says Kathy Lien at BK Asset Management.

Today's dollar exchange rates

Ahead of the retail sales figures we see:  

• The pound dollar exchange rate: 1.6148. GBPUSD has renewed it upwards assent as demand remains resilient. MACD is now stabilizing above the zeroline and should provide renewed strength. On the downside the 21-DMA at 1.6068 should provide support to the current sell-off.
• The euro dollar exchange rate: 1.3538.
• The Australian dollar to US dollar exchange rate: 0.9401.
• The New Zealand dollar to US dollar exchange rate: 0.8333.

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Bernanke squeezes US dollar lower

The main catalyst of USD squeeze has been FOMC Chair Bernanke’s dovish comments overnight.

"Bernanke reiterated that Fed is committed to maintain highly accommodative policy as long as needed and that the surest way to “more normal” policy is the robust recovery," says Ipek Ozkardeskaya at Swissquote Research.

The tapering will depend on economic data and the rates are to remain low during a considerable period after the end of bond purchases, even if the unemployment rate is below 6.5% said Bernanke.

EURUSD shortly spiked down to 1.3488 in New York as ECB’s Constancio said that the quantitative easing is a possibility but has not been discussed yet.

The weakness was very short lived as Bernanke’s dovish comments sent the pair up to 1.3579 for the first time since Nov 1st.

What are markets looking for from US retail figures and inflation?

Released at 13:30 today, Retail Sales (Month on Month) are forecasted at +0.1%, up from last month's -0.1%.

Core Retail sales (Month on Month) are forecasted to come in at +0.1%, down from last month's +0.4%.

Also due to dictated US dollar exchange rate movement is the headline inflation reading which is expected to slow in October, while core CPI is expected to hold firm.

"We expect a relatively muted response to today’s data releases, with the USD likely to remain range bound ahead of the FOMC minutes," says Lien.

According to the analyst, the market will look closely at the committee’s assessment of the impact the government shutdown had on the economy, and will likely scrutinise the committee’s thoughts on the likely timing of ‘tapering’ and on any discussion on potential enhancements to forward guidance, with particular focus on possible changes to thresholds.

"The USD will be sensitive to such comments; however we expect a message similar to that delivered from Chairman Bernanke overnight and we expect a relatively muted market reaction. Though a continuation of a dovish tone may further weigh on the USD," says Lien.