Foreign Exchange: US Dollar Ends Lower After Mixed Data
Foreign Exchange: US Dollar Ends Lower After Mixed Data
In the foreign exchange market, the United States dollar was held in a tight range Friday, finishing the day only slightly lower overall heading into the weekend.
US June retail sales data was surprised to the upside Friday morning, and along with the inflation data this week, confirmed the strength in the US recovery.
Unfortunately, inflation remains a key concern for consumers in early July, driving down the preliminary Michigan Sentiment index.
A summary of Friday’s foreign exchange action shows that EUR-USD was held to a 1.1792 to 1.1819 trading range throughout the day on light activity.
The stronger retail sales data had little impact on the pairing, nor did the 1-year inflation gauge in the Michigan report. The US recovery is faster than in Europe and the dollar remains a safe-haven currency, so the outlook for the pairing is to the downside.
GBP-USD was dragged lower by dollar gains following the strong retail sales outcome, hitting a six-session low of 1.3772 despite hawkish language from Bank of England officials this week.
UK data on manufacturing and service to be released next week are expected to be stronger following the solid inflation and labor market readings this week.
USD-JPY peaked at 110.34, helped by the retail sale data. The pairing later eased to 110.04 lows, in what was a quiet session overall.
The Bank of Japan did not change monetary policy at this meeting Friday but did lower its GDP forecast and raise its CPI inflation expectations.
USD-CAD stopped just short of Thursday’s near three-month high of 1.2614, peaking at 1.2612 earlier Friday. WTI crude prices fell to one-month lows of $70.42, down from earlier highs near $72.30, which has weighed on the Canadian dollar. Oil prices later recovered over the $72.00 mark, though pairing remained firm into the close.
