Dollar index lingering on April retail sales

The US Dollar Index strengthened by 0.2% yesterday as market is still discounting the news of robust employment data.  Market participants will now focus on tomorrow's retail sales.

The U.S. retail sales rose by 0.9% in March as consumers bought automobiles and other goods after declining in the last three months. It was the largest gain since March of 2014. Retail Sales MoM in the United States is reported by the U.S. Census Bureau.

The US NHIB survey, a key focus today: According to Lloyds Bank, "It is no surprise that optimism is muted and owners' expectations about the future are less than exuberant. Small business owners are not encouraged to expand their businesses when consumer spending is down, US trading partners are weakening and the government continues to try and micromanage the private sector with red tape and regulations." Overall the economy will keep moving forward, but more like a turtle than a hare.

As a result the US Dollar Index made an intraday high of 95.35 and closed at 95.10 on Monday. Currently dollar is trading at 1.11784 against Euro, 1.55789 versus Pounds and 120.257 versus Yen.

Derivatives Forwards expectations:

Although the April headline gain will be suppressed by soft auto sales and lower gasoline prices, we look for solid increases in the remaining components. A report in line with our forecast should bring forward market expectations for the first rate hike.

In case of hedging through Forward contracts, risk is neutralized by fixing the price that the hedger will pay or receive for the underlying asset whereas Option contracts provide insurance against adverse price movements in the future while still benefiting from favorable movements for which an upfront fee is payable in the form of Premium.