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The US dollar has found its reasons to rise with yields and upbeat jobs data but that may prove short-lived. Bulls are well-positioned to rally on retail sales, Yohay Elam, an analyst at FXStreet, informs.

Key quotes

“Returns on US debt rose also amid falling hopes for a large fiscal package. Republicans and Democrats remain far apart and are hardly talking to each other. One of the points of contention is funding for the US Post Office in face of a potential influx of mail-in ballots. The opposition wants more funds but President Donald Trump rejects these calls. The longer the spat continues, the higher the spending needed down the road as the economy struggles.” 

“A better reason for the world’s reserve currency to rise is the encouraging drop in initial jobless claims – under one million for the first time in 21 weeks. Continuing claims fell under 16 million, another positive development supporting the dollar.” 

“The resilience of America’s economy will come to a fresh test on Friday with the all-important US retail sales report for July. After two months of sharp rebounds from April’s crash, economists expect a slower increase. Are expectations too high or too low? An upside surprise could boost the dollar while a small miss could send it down.”

“US COVID-19 cases have flattened at a high rate of 50,000 per day, while deaths have also stabilized above the 1,000/day mark. Cases are on the rise in the old continent as well. Nevertheless, the situation is far worse in America.”

“Chinese and American negotiators will meet on Saturday to take stock of the trade agreement. While the world’s largest economies have been clashing on a plethora of issues, both are intent on keeping the accord intact. Markets remain calm, but any jitters may boost the safe-haven dollar.”