US DOLLAR HALTS SLIDE AMID DATA DUMP
The US dollar cut losses on Friday, even as a flurry of Eurozone data boosted optimism in the euro area economy.
An active data wire kept market participants busy in the final session of the week. The European Commission’s statistical agency said consumer inflation in the 19-member euro area rose 1.3% in the 12 months through June. Although slightly lower than the previous month’s 1.4% gain, it was higher than the 1.2% increase analysts had expected.
The Eurozone’s core inflation rate was up 1.2% annually, compared to 1% the previous month.
Earlier in the session, Germany said its unemployment rate was unchanged at 5.7% in June, even as the number of people out of a job rose unexpectedly. The German government also reported a bigger than expected rise in retail sales. Receipts at retail stores climbed 0.5% in May and 4.8% annually, official data showed.
Robust data weren’t enough to drive the euro higher on Friday. The EUR/USD exchange rate was down 0.3% but continued to trade near 14-month highs.
In Japan, the consumer price index (CPI) rose 0.4% in the 12 months through May, a sign that the central bank’s highly accommodative policy framework was beginning to pay off. So-called core inflation, which strips away volatile food items, rose 0.4% annually for its fifth straight gain.
A separate batch of Japanese data showed industrial production declined unexpectedly last month, painting a mixed picture of the recovery efforts. May industrial output fell 3.3%, partially offsetting a 4% gain during the previous session.
The Japanese yen was little changed following the news releases, with the USD/JPY trading within a narrow range.
In commodities, oil prices were on track for their seventh consecutive advance, as the market continued to recoup from 2017 lows. US West Texas Intermediate (WTI) futures were last seen trading comfortably above $45.00 a barrel.
The euro’s slight correction on Friday did very little to alter its technical outlook, but analysts say that an oversold dollar could stand in the way of further gains. The US dollar index crashed to nine-month lows this week, providing the euro with added fuel for extending its rally. The 1.15 handle offers firm resistance. On the downside, the pair is clinging on to the 1.14 psychological support.
The USD/JPY was rangebound on Friday after coming down from the 113.00 handle. The pair is barely holding onto the 112.00 region following a broad sell-off of the greenback. Immediate support is located at the 50% retracement level of 111.50. On the opposite end of the spectrum, resistance is seen at the 29 June high of 112.93.
Crude oil is wrapping up its seventh consecutive advance, as the market rebounds from a new 2017 low. Prices are up nearly 6% this week and are bound to continue higher in the short term as the market recalibrates. Traders monitoring oil should pay close attention to weekly rig count data on Friday.