Breaking News
Ad-Free Version. Upgrade your experience. Save up to 40% More details

U.S. Dollar Snaps Back Ahead Of Retail Sales

By Kathy LienForexJul 15, 2021 22:38
U.S. Dollar Snaps Back Ahead Of Retail Sales
By Kathy Lien   |  Jul 15, 2021 22:38
Saved. See Saved Items.
This article has already been saved in your Saved Items
For the past few weeks, the U.S. dollar has often moved in a completely opposite direction from Treasury yields. That trend continued on Thursday as the greenback shrugged off losses in 10-year rates to trade higher against all of the major currencies. Federal Reserve Chairman Jerome 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 360,000. Manufacturing activity in the Philadelphia region slowed, but the Empire state index hit a record high. June retail sales numbers are due for release tomorrow, 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.
The Bank of Japan meets tonight. 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 on Thursday, EUR/USD is the most vulnerable to extended losses. Amidst all of the hawkish language by policy-makers 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. This morning, BoE member Michael Saunders said it may become appropriate to withdraw stimulus soon, which echoes yesterday’s comment from Deputy Governor David Edward 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% year-over-year 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.
All three of the commodity currencies fell sharply on Thursday. Job growth in Australia slowed in the month of June, reflecting the consequences of lockdown. Virus cases are also on the rise, forcing new restrictions in Melbourne. Earlier this week, the lockdown in Sydney was extended by another two weeks. These restrictions will slow the recovery and put the Reserve Bank of Australia further behind in the line for tightening. The New Zealand dollar, which enjoyed strong post-RBNZ gains, also fell sharply, but a bounce is possible on CPI tonight. Chances are the central bank decided to the cease asset purchases because inflation is hot. Meanwhile, USD/CAD rose to its strongest level in two months. The Canadian dollar completely shrugged off the Bank of Canada’s reduction in asset purchases in favor of falling oil prices.
U.S. Dollar Snaps Back Ahead Of Retail Sales

Related Articles

Jeffrey Halley
Currency Markets Look For Direction By Jeffrey Halley - Nov 24, 2020

Dollar whipsaws against euro, sterling Currency markets were whipsawed last night, with the dollar index trading in a near 80-point range before closing almost unchanged. The...

U.S. Dollar Snaps Back Ahead Of Retail Sales

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at’s discretion.

Write your thoughts here
Are you sure you want to delete this chart?
Post also to:
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
Are you sure you want to delete this chart?
Replace the attached chart with a new chart ?
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
Sign up with Email