A big bulk of US data was released and all the data looks good. Will this allow the US dollar to recover? Yesterday we have seen excellent retail sales and rising inflation send the greenback higher but this was very short-lived.
The US dollar was on the back foot ahead of the publication and is indeed attempting to recover.
The data
- The Philly Fed Manufacturing Index smashed expectations with a jump from 23.6 to 43.3 instead of 18 expected.
- Jobless claims are up from 234K to 239K but below 245K predicted. These figures remain positive
- Housing starts are at 1.246 million instead of 1.222 predicted.
- Building permits are up to 1.285 against 1.23 forecast.
Muted USD reaction – a bad sign
For now, this stalls the attempt of EUR/USD to break above the tough resistance level of 1.0650. It moved higher on the Donald Disllusion. Will it last? The pair slips to 1.0640 but does not go very far.
USD/JPY is seeing a somewhat stronger effect: it is already 20 pips off the lows at 133.68. GBP/USD is hugging the 1.25 level.
When a currency pair fails to rise on good news, it is a clear sign of weakness. If the greenback does not start a meaningful upside move soon, we could witness how politics trump the data.
More: USD: After Fed Yellen’s Testimony: Staying Bearish And Looking To Sell Rallies – Nomura
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