iFOREX Daily Analysis : June 15, 2016

 | Jun 15, 2016 05:07AM ET

The dollar held onto gains against the other major currencies on Tuesday, as the release of upbeat U.S. retail sales data boosted optimism over the strength of the economy and as investors eyed the Federal Reserve’s monthly policy meeting due to begin later in the day.

The U.S. Commerce Department said that retail sales increased by 0.5% last month, compared to the forecast for a rise of 0.3%. Core retail sales, which exclude automobile sales, increased by 0.4% in May, in line with forecasts. Markets have pushed back expectations on the timing of the next rate hike by the U.S. central bank after a dismal U.S. employment report for May, which showed the slowest rate of jobs growth since September 2010.

The pound extended earlier losses after a TNS poll showed that the Leave campaign held 47% of the vote, compared with 40% for Remain. Undecided voters totaled 13%.

Today the U.K. is to release the monthly employment report; Canada is to publish data on manufacturing sales; and the U.S. is to release reports on producer prices, industrial production and manufacturing activity in the New York region. But all the focus will be on the Federal Reserve’s announcement of its benchmark interest rate and economic projections, at the conclusion of its two-day policy meeting. The announcement is to be followed by a press conference by Fed Chair Janet Yellen.

EUR/USD

The euro fell sharply on Tuesday, dropping to one week lows, as German 10-Year Bunds slipped into negative territory for the first time on record and increased Brexit fears prompted investors to exit their positions from the euro and pound sterling.

The currency pair traded between 1.1189 and 1.1298 before settling down 0.73% on the session. The euro has closed lower against the dollar in three of the last four sessions.

Today investors will focus on the Federal Reserve’s announcement of its benchmark interest which will be followed by a press conference by Fed Chair Janet Yellen, to gain more information on the strength of the American economy.