The struggle between dollar bulls and bears became more aggressive


However, the traders were selling the greenback at the end of the day. The data on the U.S. economy released yesterday turned out positive and better than expected, yet it did not impress investors, so the dollar showed small losses against all majors at the end of the day. Perhaps the market has high requirements for the US economic indicators, so tapering quantitative easing requires stronger economic data than those issued yesterday. The U.S. Retail Sales rose by 0.6% m/m in May (when expected to come out at 0.4% m/m) and came out at +4.3% y/y. The employment data also came out positive: last week, Unemployment Claims fell by 12 K and came out at 334 K, when expected to rise to 350 K vs. 346 K. Today, the Producer Price Index (PPI) is expected to rise to 0.1% in May, 1.4% y/y vs. -0.7%, 0.6% y/y previously, which indicates a future rise in inflation. The Current Account for the 1st quarter is expected to fall to -107.0 B vs. -110.4 B dollars. Industrial Production in May is also expected to show improvement to +0.1% m/m vs. -0.5% m/m previously, while Prelim UoM Consumer Sentiment is expected to rise to 84.9 vs. 84.5 at the end of May. If these positive forecasts confirm, investors will turn to the dollar in today’s session, especially amid technical reasons to take profits on the dollar sales, like strong support/resistance levels reached before Sunday holidays.


The euro showed mixed trading against the dollar on the previous session, but strengthened on Thursday session. The single European currency received support after the speech of the ECB President M. Draghi, who spoke for the OMT program, after which the banks could return to the market for financing and capital attraction. The OMT program is necessary for the implementation of the monetary policy and uses the tools provided by the ECB. No major economic data was released in the Eurozone yesterday. Today, the Consumer Price Index (CPI) in May is expected rise to 0.1% m/m and 1.4% y/y vs. -0.1% m/m, +1.2 % y/y in April. Core CPI is expected to rise to +1.2% y/y vs. 1.0% y/y previously. Should the forecasts confirm, these positive data will support the euro.


The British pound was trading mixed against the dollar in yesterday’s session, but the fluctuations were minor, which indicated positive sentiment for the British currency in the market. Apparently, positive PMI released last week and employment data released recently support positive mood for the cable. No major economic data was published yesterday. Today, UK construction output in April is expected to improve to -4.1% y/y vs. -7.4% y/y, while The Conference Board Leading Economic Index is expected to come out unchanged, at 0.4% m/m in April. Political news will cover the speech of MPC member Ian McCafferty. No disappointing data is expected to come out today, so the cable is expected to fix at the current levels, yet before the weekend the pound can be sold amid closing short-term positions by investors.


The Japanese yen strengthened against the dollar yesterday, yet showed smaller gains than at the previous day. The yen strengthened at the beginning of the session amid the decline in the Japanese stock market, but then changed its dynamics and was selling after the U.S. data, which supported the dollar, and amid strong technical supports reached by the USD/JPY. However, the greenback couldn’t pair all losses against the yen on the day. Obviously, investors believe that the Bank of Japan is not yet able to carry out aggressive monetary policy, with was expected after the appointment of the new government. No major data on Japan’s economy was released today. The minutes of the Bank of Japan meeting did not convince the market in upcoming aggressive measures from the BoJ, so the yen is expected to strengthen against all majors in today’s trading, despite positive dynamics at the opening of the Japanese stock market.


About Author

Hello, my name is Arkady Nagiev and I’ve been working for Forex4you company since 2008. I received an economic education and worked in various sectors of former Soviet Union. After the dissolution of the USSR, I decided to engage in the banking sector. In 1994 I took "Banking" course in the Moscow International Financial and Banking School. After that, I worked in the banks of Turkmenistan and Ukraine. While working at the bank, I became interested in the foreign exchange market, which required additional knowledge and pushed me to study strategies and techniques for the analysis of foreign exchange instruments. At first, I thought that technical analysis would be enough, but I soon realized that I was wrong, and began to study fundamental analysis. I sincerely hope that my Forex reviews and financial analyses help our clients to gain a better understanding of the forex market. Good luck with your trading everyone!