FOREX-U.S retail sales numbers are due for release today

For the past few weeks, the U.S dollar has oftentimes moved in a completely opposite direction from Treasury yields. That trend continued yesterday as the greenback shrugged off losses in 10-year rates to trade higher against all of the major currencies. Federal Reserve Chairman Powell may not be as eager to normalize monetary policy as other central banks but U.S data could force his hand. According to the latest report, jobless claims fell to a new post-pandemic low of 360K. Manufacturing activity in the Philadelphia region slowed but the Empire state index hit a record high. June retail sales numbers are due for release today and the risk is to the upside. Economists are looking for spending to fall for the second month in a row due to slower auto sales but with strong non-farm payrolls and higher wages, retail sales could beat expectations which would drive USD/JPY higher and EUR/USD lower. BoJ rate decisions are not generally big market movers especially when no policy changes are expected from the central bank. Still, a cautiously grim outlook is anticipated along with lower economic projections. Japan is struggling with the pandemic. Not only is the country in its fourth state of emergency but outbreaks have been reported at the Tokyo Olympics. While the commodity currencies sold off hard yesterday, EUR/USD is the most vulnerable to extended losses. Amidst all of the hawkish language by policymakers, ECB officials said they don’t want to taper until the time is right because Europe is still struggling with the delta variant, mixed data, and a slow recovery. Tomorrow’s Eurozone CPI and trade reports will take a backseat to U.S retail sales. The selloff in sterling masked a sharp intraday reversal. GBP/USD almost hit 1.39 on the back of hawkish comments from the Bank of England. BoE member Saunders said it may become appropriate to withdraw stimulus soon which echoes yesterday’s comment from Deputy Governor Ramsden who said he could envision tightening sooner as he wouldn’t be surprised if CPI hit 4%. This would be a significant increase from the 2.5% YoY rate just reported. Labor market numbers were mostly better with jobless claims falling more than expected, the unemployment rate improving and average earnings rising sharply. All of this plays into our view that the BoE is preparing to taper again this summer.

Euro

The single currency bounced off a more-than 3-1/2 month low against the U.S dollar after dovish comments by the Fed chief broke a recent spike in Treasury yields. In testimony to the U.S Congress, Fed Chair Jerome Powell said the U.S economy was "still a ways off" from levels the central bank wanted to see before tapering its monetary support. Overall, the EUR/USD traded with a low of 1.1823 and a high of 1.1880 before closing the day around 1.1877 in the New York session.

Yen

The Japanese Yen fell as the dollar is headed for its best weekly gain in about a month today, supported by investors' drift toward safety as rising COVID-19 infections loomed over the pandemic recovery. Solid U.S data and a shift in interest rate expectations after the Fed flagged sooner-than-expected hikes in 2023 have put a floor under the greenback. Overall, the USD/JPY traded with a low of 109.71 and a high of 110.24 before closing the day around 110.10 in the U.S session.

British Pound

The British Pound retreated further against the dollar and euro yesterday, shrugging off another set of stronger economic data and focusing on the impending end of activity curbs even as COVID-19 infection rates climbed. Britain is set to drop all COVID-linked activity curbs from next Monday, including mandatory mask-wearing. Overall, the GBP/USD traded with a low of 1.3754 and a high of 1.3898 before closing the day at 1.3897 in the New York session.

Canadian Dollar

The Canadian Dollar fell to near a three-month low against its U.S counterpart yesterday, hurt by dismal economic data and weakness in oil prices. Canada's scorching hot housing market is starting to cool, as buyers shift their focus from getting more space to getting back to normal after the COVID-19 pandemic. Overall, USD/CAD traded with a low of 1.2440 and a high of 1.2554 before closing the day at 1.2441 in the New York session.

Australian Dollar

The Australian Dollar has fallen again during the course of the trading session yesterday as the Australian dollar continues that very sickly, as the Australians have been locking parts of their economy down yet again. With this being the case, the market is likely to continue going lower, and it is worth noting that the US Dollar Index is on the verge of a breakout. Overall, AUD/USD traded with a low of 0.7408 and a high of 0.7485 before closing the day at 0.7421 in the New York session.

Euro-Yen

EUR/JPY is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also issuing a bearish stance. The Relative Strength Index is above 35 and lies below the neutral zone. In general, the pair has gained 0.63%.

Sterling-Yen

Currently, GBP/JPY is trading below 14 and above 50, 100 days moving average. Fast stochastic is issuing a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 41 reading and lies below the neutral zone. On the whole, the pair has gained 1.15%.

Aussie-Yen

Currently, the cross is trading below 14, 50 and 100 days moving average. Fast stochastic is giving a bearish tone and MACD is also indicating a bearish stance. The Relative Strength Index is above 36 reading and lies below the neutral region. In general, the pair has gained 1.15%.

Euro-Sterling

This cross is currently trading below 14, 50 and 100 days moving average. Fast stochastic is indicating a bearish tone and MACD is issuing a bullish signal. The Relative Strength Index is above 44 and lies below the neutral region. Overall, the pair has lost 0.54%.

Sterling-Swiss

This cross is trading above 14 and below 50, 100 days moving average. Fast stochastic is issuing a bullish stance and MACD is also indicating a bullish tone. The Relative Strength Index is above 46 and lies below the neutral region. In general, the pair has gained 0.67%.

Disclaimer

This information has been prepared for information only and does not constitute an offer or commitment. This information does not constitute investment advice as defined by the rules of the FCA.