Investing.com -- The U.S. Dollar Index staged a late-rally on Thursday, amid upbeat employment data, but remained stuck in tight, range-bound trade as currency traders awaited the release of critical monthly retail data at week's end for a better picture on consumer sentiment nationwide.
The Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.30% on Thursday to an intraday high of 95.90 remaining near 1-week highs. Historically, August is considered to be bullish for the dollar as the aggregate tracker of the dollar has gained an average of 32 basis points per month, according to seasonality trends compiled by DailyFx.com. Since opening the month at 95.49, the dollar is on track for its sixth winning session over the first nine days of trading while edging up by roughly 0.43%. The Dollar Index has closed higher for the month in each of the last two years.
The dollar posted marginal gains on Thursday, even as labor market indicators remained strong on the heels of last week's robust July employment report. Last week, initial jobless claims in the U.S. fell by 1,000 to 266,000 for the week ending on August 5, lingering near historic lows. The four-week moving average, meanwhile, inched up by 3,500 to 262,750, demonstrating little change from recent reports.
Market players also reacted to optimistic quarterly results from Macy’s Inc (NYSE:M) and Kohl’s Corporation (NYSE:KSS) on Thursday ahead of the release of July's closely-watched retail sales report from the U.S. Census Bureau. Shares in Macy's soared as much as 15%, after the major department store reported a lower than expected decline in same-store sales in the second quarter and outlined a plan to close 100 stores in a massive turnaround initiative. On Friday, the Census Bureau is expected to report an increase of 0.4% in retail sales last month, following a gain of 0.6% in June. Additionally, the University of Michigan could report a slight uptick in consumer sentiment in July in the wake of a sharp decline of 3.5 points a month earlier.
In February, the National Retail Federation estimated that retail sales (excluding automobile, gas and restaurant purchases) will rise 3.1% for 2016. Over the last decade, the 10-year average came in at annual growth of 2.7%.
The Federal Reserve continues to closely monitor incoming economic data, as it weighs a decision in September on the timing of its next interest rate hike. While FOMC members appear split on whether to raise short-term interest rates at a meeting next month, San Francisco Fed president John Williams told the Washington Post in an interview published on Thursday that the U.S. central bank should hike rates further this year, amid continuing labor market strength and signs that inflation is firming.
Any rate hikes by the Fed this year are viewed as bullish for the dollar, as investors pile into the greenback in order to capitalize on higher yields.
Elsewhere, the Reserve Bank of New Zealand cut interest rates by 25 basis points to a record-low of 2% on Thursday in an effort to stave off deflation, following a move by the Reserve Bank of Australia to lower rates to an all-time low of 1.5% earlier this month. Both the Australian Dollar and the Kiwi, however, inched up against the Dollar to near 1-month highs, after the RBNZ provided few hints that further rate cuts could be forthcoming. USD/MXN plunged 1.01% to a fresh two-month low at 18.1574 after Mexico's Central Bank held rates steady, citing concerns with the U.S. presidential election.
Yields on the U.S. 10-Year surged six basis points to 1.56%, as investors digested a subdued auction from the previous session. Although yields on 10-year U.S. Treasuries are down 58 basis points in the last year, they have rallied 13 BPs over the last month.